wienerberger annual report 2013

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13

The Year 2013 in ReviewWienerberger increased revenues by 13% to € 2,662.9 million and operating EBITDA by 9% to

€ 266.5 million in 2013. This sound development was recorded in spite of an ongoing difficult market

environment during the past year. In particular, business in Europe was negatively affected by unusually

severe weather during the first six months and by general weakness in the construction industry throughout

the entire year. Although this region is responsible for roughly 90% of revenues, Wienerberger generated

a solid increase in revenues and earnings. This growth was driven, above all, by a positive contribution

from the pipe business, which benefited from international project orders for plastic pipes, and by good

development in North America.

In spite of the difficult environment, Wienerberger successfully expanded its market positions in a

number of countries during 2013. The restructuring measures launched in 2012 were implemented as

planned, and net debt was substantially reduced through financial discipline and strict working capital

management. The ratio of net debt to operating EBITDA equaled two years at year-end, which is clearly

lower than the internal goal of two and one-half years. Even if the bottom line shows a small loss

of € 7.8 million for 2013, free cash flow of € 92.9 million underscores the strength of Wienerberger’s

business model.

Market positionsWienerberger is the world’s largest producer of clay blocks and number one in facing bricks in Europe

and the USA as well as the market leader for clay roof tiles in Europe. The Group is also one of the leading

suppliers of plastic pipes and ceramic pipes in Europe and concrete pavers in Central-East Europe.

Clay blocks: Nr. 1 worldwideFacing bricks: Nr. 1 in Europe, co-leader in the USAClay roof tiles: Nr. 1 in EuropePlastic pipes: Leading position in EuropeCeramic pipes: Nr. 1 in EuropeConcrete pavers: Nr. 1 in Central-East Europe

Annual Report 2013

Our typical waiting position.

Explanatory notes to the report:- Operating EBITDA, operating EBIT and adjusted earnings per share are adjusted for non-recurring income and expenses.- ROCE and EVA® are calculated based on average capital employed.- CFROI and CVA are calculated based on average historical capital employed.- Rounding differences may arise from the automatic processing of data.

Earnings Data 2011 1) 2012 2013 Chg. in %

Revenues in € mill. 1,915.4 2,355.5 2,662.9 +13

Operating EBITDA in € mill. 240.4 245.5 266.5 +9

Operating EBIT in € mill. 40.0 31.0 55.3 +78

Restructuring costs and impairment charges to PPE in € mill. 0.0 -43.0 0.0 +100

Impairment charges to goodwill in € mill. -2.6 -9.8 0.0 +100

Release of a provision for an impending antitrust penalty in € mill. 0.0 0.0 9.4 >100

EBIT in € mill. 37.5 -21.7 64.7 >100

Profit before tax in € mill. 47.4 -36.2 -3.1 +91

Profit after tax in € mill. 39.4 -40.5 -7.8 +81

Free cash flow 2) in € mill. 135.0 163.6 92.9 -43

Normal capex in € mill. 95.8 105.3 106.0 +1

Growth capex in € mill. 55.9 163.4 0.7 -100

ROCE 3) in % 0.9 0.4 1.3 -

CFROI 3) in % 5.0 5.2 5.1 -

Ø Employees 11,893 13,060 13,787 +6

Balance Sheet Data 2011 1) 2012 2013 Chg. in %

Equity 4) in € mill. 2,430.8 2,363.7 2,254.2 -5

Net debt in € mill. 358.8 602.0 538.9 -10

Capital employed in € mill. 2,652.1 2,931.3 2,767.6 -6

Balance sheet total in € mill. 3,991.4 4,139.7 4,211.4 +2

Gearing in % 14.8 25.5 23.9 -

Stock Exchange Data 2011 1) 2012 2013 Chg. in %

Earnings per share in € 0.07 -0.61 -0.34 +44

Adjusted earnings per share in € 0.09 -0.25 -0.40 -60

Dividend per share in € 0.12 0.12 0.12 0

Share price at year-end in € 6.97 6.93 11.53 +66

Shares outstanding (weighted) 5) in 1,000 116,762 115,063 115,063 0

Market capitalization at year-end in € mill. 819.2 814.3 1,354.5 +66

Divisions 2013 Clay Building Pipes & Pavers Holding

in € mill. and % 6) Materials Europe Europe North America & Others Reconciliation

Third party revenues 1,402.4 (-3%) 1,029.5 (+45%) 224.7 (+16%) 5.6 (+4%)

Inter-company revenues 1.9 (-21%) 0.9 (>100%) 1.2 (>100%) 9.1 (+5%) -12.4 (-21%)

Revenues 1,404.3 (-3%) 1,030.4 (+45%) 225.9 (+17%) 14.7 (+4%) -12.4 (-21%)

Operating EBITDA 171.3 (-7%) 100.3 (+49%) 13.2 (+35%) -18.2 (-21%)

Operating EBIT 35.0 (-4%) 52.1 (+65%) -9.3 (+37%) -22.6 (-2%)

CFROI in % 4.5 - 14.2 - 1.9 - -30.4 -

Total investments 61.7 (-6%) 34.9 (-81%) 7.3 (-52%) 2.8 (-31%)

Capital employed 1,776.3 (-6%) 552.6 (-3%) 426.6 (-7%) 12.1 (+37%)

Ø Employees 8,323 (-5%) 4,047 (+33%) 1,213 (+14%) 204 (-2%)

All abbreviations and special terms are explained in the glossary on page 178.

Revenues and Operating EBITDA Marginin € mill. and %

2011 2012 2013

Revenues

Operating EBITDA margin

0%

10%

20%

30%

40%

1,91

5.4 2,35

5.5

2,66

2.9

10.4 10.012.6

Operating EBITDA and EBITin € mill.

2011 2012 2013

Operating EBITDA

EBIT

0

100

-100

200

300

240.

4

245.

5

266.

5

37.5

-21.

7

64.7

Earnings per Sharein €

IFRS

Adjusted

-1.0

0.0

0.5

-0.5

1.0

2011 2012 2013

0.07

0.09

-0.6

1

-0.3

4

-0.2

5

-0.4

0Equity and Net Debtin € mill.

2011 2012 2013

Equity

Net debt

0

500

1,000

1,500

2,000

2,500

3,000

2,43

0.8

2,36

3.7

2,25

4.2

358.

8

602.

0

538.

9

Free Cash Flow and Growth Capexin € mill.

2011 2012 2013

Free cash flow

Growth capex

0

100

50

200

150

250

135.

0 163.

6

92.9

55.9

163.

4

0.7

ROCE and CFROIin %

2011 2012 2013

ROCE

CFROI

WACC

Hurdle rate

0.0

3.0

6.0

9.0

12.0

5.0

5.2

5.1

0.9

0.4 1.

3

Revenues by Segment Operating EBITDA by Segment

1

2

5

4

3

6

1

2

3

6

5

4

1

2

6

5

4

3

1 Clay Building Materials Western Europe 41%2 Clay Building Materials Eastern Europe 12%3 Pipes & Pavers Western Europe 22%4 Pipes & Pavers Eastern Europe 17%5 North America 8%6 Holding & Others 0%

1 Clay Building Materials Western Europe 49%2 Clay Building Materials Eastern Europe 15%3 Pipes & Pavers Western Europe 25%4 Pipes & Pavers Eastern Europe 13%5 North America 5%6 Holding & Others -7%

Revenues by Product

1 Wall 23%2 Roof 15%3 Facade 22%4 Surface 4%5 Pipes 36%6 Holding & Others 0%

If you want to learn more about

Wienerberger and there is no order card

attached, you can ask for our annual or

quarterly reports or add your name

to our mailing list by contacting us at

T +43 1 601 92 10221 or

[email protected]

The Annual Report and Annual Financial Statements for 2013,

which were released on March 28, 2014 and presented at the

145th Annual General Meeting on May 16, 2014 in Vienna,

are also available for download under www.wienerberger.com.

Available in German and English.

1) The data were adjusted to reflect a change in accounting policies2) Cash flow from operating activities less cash flow from investing activities plus growth capex3) 2012 calculated on a pro-forma 12-month basis4) Equity including non-controlling interests and hybrid capital5) Adjusted for treasury stock6) Changes in % to the comparable prior year period are shown in brackets

Publisher: Wienerberger AG, A-1100 Vienna, Wienerberg City, Wienerbergstrasse 11

T +43 1 601 92 0, F +43 1 601 92 10425

Inquiries may be addressed to:The Managing Board: Heimo Scheuch, CEO, Willy Van Riet, CFOInvestor Relations: Klaus Ofner

Concept, Design and Realization: Mensalia UnternehmensberatungInitial Concept Idea: Andreas MiedanerText Pages 54–172: Produced in-house using FIRE.sysPhotos: Roman Bönsch, Kurt Keinrath, Daniel Gebhart de KoekkoekPrinted by: Grasl FairPrint, AustriaTranslation: Donna Schiller-Margolis



Revenues in € mill. 1,915.4 2,355.5 2,662.9 +13






EBIT in € mill. 37.5 -21.7 64.7 >100






ROCE 3) in % 0.9 0.4 1.3 -

CFROI 3) in % 5.0 5.2 5.1 -

Ø Employees 11,893 13,060 13,787 +6


Equity 4) in € mill. 2,430.8 2,363.7 2,254.2 -5

Net debt in € mill. 358.8 602.0 538.9 -10



Gearing in % 14.8 25.5 23.9 -












Revenues 1,404.3 (-3%) 1,030.4 (+45%) 225.9 (+17%) 14.7 (+4%) -12.4 (-21%)


Operating EBIT 35.0 (-4%) 52.1 (+65%) -9.3 (+37%) -22.6 (-2%)

CFROI in % 4.5 - 14.2 - 1.9 - -30.4 -



Ø Employees 8,323 (-5%) 4,047 (+33%) 1,213 (+14%) 204 (-2%)



2011 2012 2013

Revenues


0%

10%

20%

30%

40%

1,91

5.4 2,35

5.5

2,66

2.9

10.4 10.012.6


2011 2012 2013

Operating EBITDA

EBIT

0

100

-100

200

300

240.

4

245.

5

266.

5

37.5

-21.

7

64.7


IFRS

Adjusted

-1.0

0.0

0.5

-0.5

1.0

2011 2012 2013

0.07

0.09

-0.6

1

-0.3

4

-0.2

5

-0.4

0

Equity and Net Debtin € mill.

2011 2012 2013

Equity

Net debt

0

500

1,000

1,500

2,000

2,500

3,000

2,43

0.8

2,36

3.7

2,25

4.2

358.

8

602.

0

538.

9


2011 2012 2013

Free cash flow

Growth capex

0

100

50

200

150

250

135.

0 163.

6

92.9

55.9

163.

4

0.7

ROCE and CFROIin %

2011 2012 2013

ROCE

CFROI

WACC

Hurdle rate

0.0

3.0

6.0

9.0

12.0

5.0

5.2

5.1

0.9

0.4 1.

3


1

2

5

4

3

6

1

2

3

6

5

4

1

2

6

5

4

3



Revenues by Product







T +43 1 601 92 10221 or

[email protected]








T +43 1 601 92 0, F +43 1 601 92 10425



Even though markets don’t always develop the way we want ...

Our Corporate CultureWhat we strive for Supplying outstanding sustainable building material solutions for a better quality of life

What we work for We develop energy-efficient, resource-efficient and sustainable building material solutions that set industry standards. We are committed to continuous improvement and technological leadership to create the highest added value for our customers.

What we stand for Expertise – Passion – Integrity and Respect – Customer Orientation – Entrepreneurship – Quality – Responsibility

... we’re always moving forward.

We refuse to stand still. The result: 600 new products.Sustainable and energy-efficient buildings, environmentally friendly pavers, supply and sewage systems – in all areas of the Group, we’re continuously working on innovations.

There were lots of moving moments in 2013.In numbers: 18.5 million customer contacts.Our goal is to stay close to our customers. We bring our passion for our products to the market and take new ideas back to our company.

With 178,000 training hours, our team is always on the move.Expertise and personal responsibility are key values in our corporate culture. Our internal training provides our employees with the opportunity to achieve their development goals.

We’re not to be stopped – even in new markets.The result: 360,000 km of pipes laid.We developed a number of new markets through the expansion of the pipe business. Together with our nearly 3,200 new employees, we are working to realize the growth potential in this area.

Standstill is not in our vocabulary.What we really understand: being constantly on the move. Because that’s the only way to stay on top in difficult markets.

Contents

16 Chief Executive’s Review

54 Corporate Governance at Wienerberger

58 Members and Committees of the Supervisory Board

59 Managing Board and Management

62 Organization

64 Remuneration Report

69 Report of the Supervisory Board

20 Wienerberger Group at a Glance

22 Corporate Structure & Divisions

24 Highlights 2013

26 Products and System Solutions

30 The Wienerberger Product World

32 Plant Sites and Market Positions

34 Strategy and Business Model

38 Success Factors and Major Drivers

40 Interview with the Managing Board

44 Employees

46 Production

48 Procurement

49 Investor Relations

50 Sustainability at Wienerberger

52 Sustainability Projects in 2013

73 The Economy and Capital Markets

77 Financial Review

89 Operating Segments

89 Clay Building Materials Europe

94 Pipes & Pavers Europe

98 North America

99 Holding & Others

Corporate Governance ReportThe Company Management Report

Chief Executive’s Review

100 Outlook and Goals

101 Additional Information on the Company

101 Research and Development

102 Sustainability Management

103 Wienerberger Share and Shareholders

106 Risk Management

108 Internal Control System

109 Contents

110 Income Statement

111 Statement of Comprehensive Income

112 Cash Flow Statement

113 Balance Sheet

114 Changes in Equity Statement

116 Notes to the Financial Statements

116 General Information

124 Notes to the Income Statement

131 Notes to the Statement of Comprehensive Income

132 Notes to the Cash Flow Statement

133 Notes to the Balance Sheet

156 Significant Accounting Policies

163 Risk Report

170 Other Information

172 Statement by the Managing Board

173 Group Companies

177 Auditor’s Report

178 Glossary

181 Addresses of Major Companies

182 Ten-Year Review

184 Financial Calendar

Order Card and Imprint

Financial Statements Service

Quick Response (QR) Codes

You will find QR codes at selected points in this annual report. Scan the codes with your smartphone and visit the linked websites for more detailed information.

www.wienerberger.com

16

Dear Shareholders,

2013 was both a successful year and an eventful year for Wienerberger. Successful because

we increased revenues and earnings and met all our ambitious goals in spite of the ongoing weak

ness in the European construction sector. Eventful because we worked hard to expand our leading

market positions and, at the same time, took decisive steps to ensure our continued success in

the future.

The market environment in Europe was characterized by unusually severe weather during

the first six months and by general weakness in the construction industry throughout the entire

year. Although Europe accounts for roughly 90% of our revenues, we generated a sound increase

in revenues and earnings during 2013. Group revenues rose by 13% to € 2.7 billion and operating

EBITDA by 9% to € 267 million. This growth was driven, above all, by the positive contribution

from our pipe business. Project tenders for pipe systems in Europe were limited by the consoli

dation pressure on national budgets. However, Wienerberger recorded aboveaverage growth in

the international project business with its large special pipes, which have a diameter of up to

2.5 meters. Pipelife is the world’s largest supplier of these products. Together with a broad product

portfolio of fiberreinforced pipes and pipes for electrical and water installations in the industrial

and private sectors, the plastic pipe business remained on a growth course in 2013. The Pipes &

Pavers Europe Division recorded a yearonyear increase of 45% in revenues and 49% in operating

EBITDA during 2013, in particular due to the initial consolidation of Pipelife in the first five

months. These results underscore the central importance of the pipe business for our Group and

confirm Wienerberger’s diversification strategy. Sound development was also recorded in

North America, where the recovery in US new residential construction continued. Higher volumes

and strict cost management led to an improvement in margins in the US brick business. The

North America Division reported an increase of 16% in revenues and 35% in operating EBITDA

for the year which supported a substantial improvement in margins. In the European brick

business, we were unable to offset the weatherrelated volume declines from the first halfyear

during the second six months. Revenues recorded by the Clay Building Materials Europe Division

fell by 3% and operating EBITDA by 7%. However, this division is on a good course because we

were able to implement all restructuring measures as planned.

In addition to generating sound revenue and earnings growth, we met all our ambitious oper

ating and financial goals in 2013. Net debt was reduced substantially through further cost savings,

financial discipline and successful working capital management. The restructuring measures

launched in 2012 were implemented as planned in the Clay Building Materials Europe Division and

at Semmelrock. The resulting € 19 million of cost savings were slightly higher than originally

expected. We also realized approx. € 14 million of additional liquidity from the sale of noncore

real estate. Despite the first full inclusion of Pipelife, normal capex for the Wienerberger Group

(which includes maintenance and technological improvements) amounted to € 106 million and was

clearly below the € 115 million budgeted at the beginning of the year. Strict working capital manage

ment led to a reduction in working capital from 25% at yearend 2012 to the current 20% of

2013 was a successful year for Wienerberger

Diversification strategy confirmed by 13% increase in revenues and 9% in operating EBITDA in a difficult market environment

Net debt declines 10% to € 539 million due to financial discipline, cost savings and strict working capital management

16

CHIEF EXECUTIVE’S REVIEW

17

Wienerberger AGAnnual Report 2013

Group revenues. As a result of these measures, net debt declined substantially from € 602 million

at yearend 2012 to € 539 million at the end of December 2013. The ratio of net debt to operating

EBITDA equaled 2 years at yearend, which is clearly lower than our internal target of less than

2.5 years.

In 2013 we continued to work hard to differentiate ourselves from our competitors with

innovative product solutions and wideranging service expertise. Wienerberger was therefore able

to outperform the competition and to further expand market shares in countries like Great Britain,

Poland and the Czech Republic – to name only a few.

Even if our bottom line shows a small loss after tax of € 8 million for 2013, free cash flow of

€ 93 million underscores the strength of our business model. The Managing Board will therefore

make a recommendation to the annual general meeting on May 16, 2014, calling for the payment

of a € 0.12 dividend per share for the 2013 financial year. We believe in Wienerberger’s strength

to also generate sustainable cash flows in the future and want to demonstrate this confidence to

you, our shareholders, through this dividend.

We also took decisive steps to ensure our continued success in the future. Along with invest

ments in futureoriented sustainable product solutions and measures to strengthen our service

orientation, we adjusted our organizational structures. Efficient and effective structures as well

as the right people in key strategic positions are central factors for success in a competitive market.

In line with our new divisional structure, we have installed an experienced management team in

each division. These managers will be responsible for implementing the Group’s strategy in their

respective operating areas and further optimizing the country structures. We also utilized oppor

tunities to realize synergies, for example by combining administrative functions like payroll

accounting across divisions.

Wienerberger strengthens market positions in 2013

Managing Board will recommend dividend of € 0.12 per share to annual general meeting

Decisive steps for the future taken in 2013

17

Heimo Scheuch, Chief Executive Officer

of Wienerberger AG

18

In order to ensure continuity in positions that are critical for the Group’s success, we have

established a structured and systematic succession management process throughout the Group.

The first step involved the designation of key positions as the basis for our structured succession

planning. We then identified internal talents and highpotentials who will be gradually developed

over the coming years as successors for these key positions through specially designed training

and mentoring programs. This process will protect our ability to fill key management positions

with the right people at the right time and improve our competitive position.

I am therefore optimistic that we will also continue our growth course in 2014. Our goal for

the year is a substantial increase in revenues and earnings and the generation of a net profit. The

new residential construction market in Europe should stabilize or grow slightly, and the positive

trend in the USA should continue. In the pipe business, I cannot exclude a slight decline in oper

ating earnings because it will be difficult to duplicate the good results from the project business

in 2014. Our focus remains on financial discipline, which means the generation of free cash flow,

an increase in profitability through continuous optimization, a prudent investment policy and

organic growth based on innovative, highquality product solutions. We have budgeted

€ 125 million for normal capex in 2014, which includes maintenance as well as technological

improvements. The ratio of net debt to operating EBITDA is also expected to remain below the

targeted 2.5 at yearend. The sale or development of noncore real estate should generate approx.

€ 75 million of additional liquidity by 2016. Within our financial capacity, we will also evaluate

selective opportunities for valuecreating acquisitions in the future. Included here are projects

that make a positive contribution to reaching our CFROI target of over 11.5% at the Group level.

In the operating business, our focus for the coming years will remain on organic growth. We

want to drive growth and expand our market positions in the future with our innovative strength,

premium system solutions for building materials and comprehensive services. We are working

continuously on solutions to offer our customers comfortable, energyefficient living and supply

security for water, electricity and gas. One example from the brick business is our mineral wool

filled clay block: this futureoriented product was successfully positioned in Germany and is now

being rolled out in other countries. A new filling line for the production of these clay blocks

started operations in Austria during the second half of 2013 and a similar production line will

open in the Czech Republic during the first quarter of 2014. This will create opportunities

for further growth in these markets. Such investments are comparatively low, but they form the

basis for strengthening our market positions. That makes these investments a key part of

Wienerberger’s future growth strategy and the course we also want to follow in the future.

Before I close this letter, I would like to make a few comments in memory of Friedrich

Kadrnoska, who passed away on December 9, 2013 after a brief but serious illness. Through his

work on the Supervisory Board of Wienerberger AG, which he headed as chairman following his

election in 2002, Friedrich Kadrnoska played a decisive role in the Group’s strategic orientation.

He was one of the driving forces in the conversion of Wienerberger into a pure free float company

Implementation of structured and systematic succession management

Goals for 2014: further growth in revenues and earnings, return to the profit zone

Focus remains on organic growth through innovation and services

19


during 2004, which represented an important milestone in our development. His many years of

service on the Supervisory Board brought further expansion steps in Great Britain and Canada

as well as the development of a second strategic pillar in the roofing business with the acquisition

of Koramic. During the crisis and the many challenges it created for Wienerberger, his great

personal commitment was a source of support for us all. We came to value not only his profes

sional expertise, but also his human side during the many years we worked together, and will

always remember Friedrich Kadrnoska as an extraordinary man and a strong personality.

Since our longterm succession management process has been implemented at all levels of

the Wienerberger Group, the Supervisory Board was able to react immediately to this sad event.

Regina Prehofer, who joined our Supervisory Board in May 2011, was unanimously elected chair

woman at the Supervisory Board meeting on December 10, 2013. I am particularly pleased that

this decision makes Wienerberger the first and only ATX company with a woman at the head of

the Supervisory Board and see this as a strong sign of our Group’s support for women in manage

ment positions. Willy Van Riet, my colleague on the Managing Board, and I look forward to

working with the Supervisory Board chaired by Regina Prehofer.

As a final point, I would like to thank the many men and women who supported Wienerberger

during the past year and played an important role in the Group’s successful development. The

central factors for our success are our employees, who worked hard with passion and dedication

to develop their operating businesses and reach our corporate goals in 2013. I would like to thank

you all for your tremendous commitment in these challenging times. This dedication is also

honored by our customers and business partners, who I would like to thank for their productive

cooperation and confidence. I would also like to thank the Supervisory Board for their valuable

and supportive discussions and the efficient handling of issues, and Willy Van Riet for the inten

sive and constructive teamwork on the Managing Board in 2013. In conclusion, I would like to

thank you, our shareholders, for your continuing trust in Wienerberger during the past year. I

look to the future with optimism, and I invite you to join us on this course.

Regina Prehofer unanimously elected chairwoman of the Supervisory Board on December 10, 2013

Thanks to employees, management, customers, partners and shareholders

Chief Executive’s Review

Founded in 1819 as an Austrian brick manufacturer,

Wienerberger has developed over the past three

decades into an international building materials

group that combines Clay Building Materials and

Pipes & Pavers businesses. Strategic milestones in

the company’s expansion include market entry in

North America during 1999, the expansion of

roofing systems starting in 2003 and the full take

over of the plastic pipe producer Pipelife in 2012.

Today Wienerberger has a broad industrial base, high

innovative strength and a strong corporate

culture, and is well positioned to profit

from a market recovery through

organic growth.

Who we are

4

2

1

5

4

6

8

8

20

Wienerberger Group at a Glance

THE Company

7

2

5

7

4

1

68

Clay blocks:

Nr. 1 worldwide

Facing bricks:

Nr. 1 in Europe, co-leader in the USA

Clay roof tiles:

Nr. 1 in Europe

Plastic pipes:

Leading position in Europe

Ceramic pipes:

Nr. 1 in Europe

Concrete pavers:

Nr. 1 in Central-East Europe

Clay Building Materials

1 Monolithic wall with

clay blocks

2 Cavity wall with

clay blocks and facing bricks

3 Facade systems

4 Roofing systems

Pipes & Pavers

5 Pipe systems for

wastewater, fresh water, gas supply and cable protection

6 Rainwater management

7 Pipe systems for

building installations

8 Concrete pavers

What we do

Where we are

India

Europe (92%)

North America (8%)

5

21

3

7

India

Europe (92%))

North America (a (8%)

Corporate Structure & Divisions

Wienerberger increased revenues by 13% to € 2,662.9 million and operating EBITDA by 9% to € 266.5 million in 2013. A positive contribution by the pipe business and sound develop ment in North America offset declines in the European brick business, which was hit hard by unusually severe weather during the first six months and by general weakness in the construction industry throughout the entire year.

Revenues

Operating EBITDA

Adjusted EPS

Dividend per share

Balance sheet total

Equity ratio

Net debt

Free cash flow

Ø Employees

2,662.9

266.5

0.40

0.12

4,211.4

53.5

538.9

92.9

13,787

in € mill.

in € mill.

in €

in €

in € mill.

in %

in € mill.

in € mill.

2,355.5

245.5

0.25

0.12

4,139.7

57.1

602.0

163.6

13,060

Wienerberger Group

Key FigureS

ProDuct grouPS


Revenues by Product

1 Wall 26%2 Roof 31%3 Facade 16%4 Surface 4%5 Pipes 36%6 Holding & Others -13%

Operating EBITDA by Product

20122013

EBITDA growth: € 266.5 million +9%

Operating cash flow: € 164.6 million +30%

Net debt reduction: € 538.9 million 10%

11

2

2

33

44

55

66

Free cash flow of € 92.9 million in 2013 underscores the strength of the Group’s business model and, together with strict working capital management and financial discipline, led to a substantial reduction in net debt. The Managing Board will therefore recommend the distribution of a € 0.12 dividend per share for the 2013 financial year to the annual general meeting.

22

Divisions

revenueS 2013

oPerating eBitDa in € mill.

Holding & Others

0%

North America

8%

Facing Bricks

Plastic Pipes

Concrete Products

Pipes & Pavers Europe

39%

Plastic Pipes

Ceramic Pipes

Concrete Pavers

Clay Building Materials Europe

53%

Clay Blocks

Facing Bricks

Roof Tiles

2012

201220122012

2013

201320132013

184

67

10

-15

171

100

13

-18

23

The CompanyCorporate Structure & Divisions

Wienerberger aGannual Report 2013

28.06.11.04.2013

Highlights 2013

€ 300 million bond success-fully placed

Wienerberger places a € 300 million bond in April with a 4% coupon and a term extending to 2020

Substantial interest by institutional investors underscores confidence in Wienerberger

Over 75% of the volume is placed with international investors

Financial discipline and a balanced financing structure remain top priorities for Wienerberger

Refinancing needs for 2014 secured prematurely

Wienerberger leads the way to the housing

of the future With the publication of the 2012 sustainability report,

Wienerberger invites discussions on the housing of the future

Wellknown experts from science and practice present visionary approaches to the central issues of healthy living and affordability

Prof. Timo Leukefeld introduces his energyindependent house, which generates and stores its own energy; the building shell is constructed with high thermal insulating clay blocks

Wienerberger building materials make the healthy, affordable home of the future possible today and guarantee high quality living

Trading Update An unusually long winter and heavy rainfall in parts of

Europe have a negative effect on business development in the Clay Building Materials Europe Division during the first half of 2013

Due to the low visibility at the start of the year, Wienerberger decides to issue a trading update on market developments

The operating EBITDA guidance announced at the beginning of the year is reduced by € 20 million due to the absence of catchup effects

New target for the full year 2013: operating EBITDA of € 260 million

Capital Markets Day

2013 in the USA Heimo Scheuch and Willy Van Riet present

the Wienerberger Group’s business development, strategy and goals to investors and analysts in North Carolina

Dick Green (CEO North America) and his colleagues then provide an overview of business activities at our General Shale subsidiary and, in one of our showrooms, demonstrate what we understand as “Building the American Dream”

The program is rounded off by a tour of a facing brick plant

24

11.07. 05.09. 24.09. 03.12. 11.12. 20.12.

Opening of an innovative production

plant in Austria In Haiding, Upper Austria, Wienerberger completes

construction of its most modern production facility

A top product in the brick family – a high thermal insulating brick filled with mineral wool – is now 100% “Made in Austria”

Buildings made of these innovative bricks make an important contribution to climate protection and represent the future of construction

Termination of antitrust proceedings against Wienerberger

in Germany Proceeds against Koramic Dachprodukte

GmbH & Co KG for alleged agreements in restraint of trade are terminated

Wienerberger filed an appeal against the announced fine in 2008

€ 10 million provision is released to the income statement

Anticompetitive agreements are not part of Wienerberger’s business practices – they are expressly prohibited by internal guidelines and any violations are met with sanctions

Wienerberger mourns the loss of Supervisory

Board Chairman Friedrich Kadrnoska

With deep regret, Wienerberger announces the death of Friedrich Kadrnoska

Wienerberger’s longstanding Supervisory Board chairman died at the age of 62 after a brief, severe illness

During his tenure, Friedrich Kadrnoska played a decisive role in the Group’s strategic orientation

Regina Prehofer, member of the Supervisory Board since May 2011, is unanimously elected as the first woman to chair the Supervisory Board of Wienerberger AG

Steinzeug-Keramo receives sustainability

certificate The ceramic pipe systems made by this Wienerberger subsidiary

meet the challenging ecological criteria for Cradle to Cradle® certification

The underlying principle behind the Cradle to Cradle® concept requires full recycling for all components remaining at the end of the product life cycle

Vitrified clay pipes are made of 100% natural raw materials, are recyclable and have a long service life

The products made by SteinzeugKeramo were certified by an independent institute

25

The CompanyHighlights 2013


The continuous improvement of our products represents a key strategic element of

Wienerberger’s sustainable success. We focus on the development of innovative products and

system solutions in all our application areas – from sustainable and energy-efficient buildings to

environmentally compatible pavers and supply and sewerage systems. Our product management

specialists work closely with the various marketing and sales departments to ensure that new

developments always meet the needs of our customers. The following pages provide an overview

of our products and innovations.

Clay Building MaterialsWienerberger’s activities in the area of Clay Building Materials cover three product groups:

solutions for wall, facade and roof.

Wall – clay blocksClay blocks are used for load-bearing exterior and interior walls as well as for non-load-

bearing partition walls or fillwork. A wall made of clay blocks is normally not seen after comple-

tion because it is covered with plaster or paneling. In any case, the technical advantages and

features of these monolithic walls are compelling: high compressive strength, excellent thermal

insulation and heat accumulation, sound insulation, high fire resistance (nonflammable) and

healthy moisture regulation. In short, walls made of clay blocks are sturdy and safe, and create

an unmistakably pleasant and comfortable atmosphere.

Innovations for wallsOne special innovation milestone is the Porotherm W.i., a clay block with integrated insula-

tion. The voids in this product are filled with thermal insulation in the form of mineral wool,

which eliminates the need for additional insulation on the outside of the house and makes

construction more energy-efficient.

Wienerberger has also developed a special line of clay blocks for multi-story commercial

construction. The key features of these products are efficient thermal insulation, high stress

resistance, good acoustic protection and outstanding fire protection as well as low thickness.

Minimizing the total thickness of the exterior wall optimizes the usable space and thereby

improves the overall profitability of a project for the developer. The building users also benefit

from the pleasant and healthy atmosphere created by a brick wall.

For even faster construction of brick walls, Wienerberger developed the Dryfix® adhesive

system (special aerosol masonry glue that speeds up construction and eliminates the need for

mortar) in combination with plane ground blocks. This adhesive system speeds up construction

and thereby reduces the cost of massive brick walls.

Facade – facing bricksFacing bricks are used in visible brick architecture: facades and interior walls are made from

or covered with these bricks. The necessary functions of the load-bearing walls are provided by

clay blocks or other building materials. A wall made of facing bricks is an esthetic calling card

and provides optimal protection from the weather, but still allows the building to “breathe”. The

sturdiness of the facade bricks eliminates the need for maintenance or expensive renovation in

Continuous product development as the basis for sustainable success

26

Products and System Solutions


Revenues by Product

Operating EBITDA by Product

1 Wall 26%2 Roof 31%3 Facade 16%4 Surface 4%5 Pipes 36%6 Holding & Others -13%

6

6

5

5

4

4

3

3

2

2

1

1


later years, which also helps to reduce costs. Wienerberger facing bricks are sold under the

Terca brand. They open up a wide range of design alternatives through the combination of colors,

shapes and surface structures – a feature that is rarely found in other building materials. Facing

bricks can be combined together in storyhigh prefabricated elements for fast construction.

Especially in the nonresidential sector, brick architecture can therefore play an important role

in modern, economic building.

innovations in facadesThe Terca EcoBrick® is an innovative facade solution made by Wienerberger: thin facing

bricks with a thickness of 65 mm create additional space for insulation without increasing the

width of the wall or impairing the desired stability. EcoBricks also have a positive effect on

resource consumption because of their lean form. Terca has developed a particularly thin alterna

tive especially for use with external composite thermal insulation systems. These 20 mm wide

brick slips not only improve the appearance of the building, but also provide perfect protection

against the weather.

Argeton facade boards make it possible to design timeless, modern facades with the distinctive

character of ceramics. They can also be ideally combined with a variety of other building materials

like steel and glass. The special development Argelite is wellsuited for renovation because it saves

space and has a low weight. In addition, Argeton was the first ceramic facade board product to

pass the safety test for ball impact. That makes an Argeton facade particularly well suited for

buildings like schools or day care centers, which are exposed to increased mechanical stress.

Roof – clay roof tilesClay roof tiles are used to cover pitched roofs, flat roofs with a slope of up to 10° and, increas

ingly, for facade design. A roof covered with clay roof tiles protects the house and the facade from

the weather and moisture for many years. Clay roof tiles also represent an important design

element. Wienerberger has developed a wide variety of forms, colors and shapes that allow for

the creative realization of modern residential construction projects and also support traditional

solutions for renovation and historical preservation. The product line ranges from modern flat

tiles with engobe to the natural red flat tiles that have been used for centuries. Wienerberger clay

roof tiles are sold in Western Europe under the Koramic brand and in Eastern Europe through

our 50% investment Tondach Gleinstätten.

innovations for roofsWienerberger offers a onestop shop solution for roofs: each model (type of tile) is accom

panied by a full line of tiles as well as ceramic and technical accessories. These durable, colorfast

and stable clay roof tiles are marketed together with a complete line of system components whose

functions, forms and colors are perfectly coordinated to match the respective roof tile line. The

introduction of overrafter insulation products for thermal renovation made Wienerberger a full

system provider for roofs. Increasingly extreme wind and weather conditions have also led to

growing demands on the resistance of roofs. Wienerberger has met this challenge with the patented

Sturmfix system, which uses special fixation hooks to protect roof tiles from even the strongest

storms.

Terca Eco-Bricks® reduce resource consumption

Argeton ceramic facade boards are optimally suited for renovation and restoration

Clay roof tiles are used on pitched and flat roofs as well as facade design

Wienerberger is a full system provider for roofs

27

The Companyproducts and System Solutions

Pipes & PaversWienerberger pipes & pavers cover three product groups: plastic pipes (Pipelife), ceramic

pipes (SteinzeugKeramo) and concrete pavers (Semmelrock).

Plastic pipesPlastic pipes are suitable for a wide range of applications. The product portfolio of high

quality, durable pipe systems with matching fittings and accessories covers systems for rainwater

and wastewater disposal, sanitary and heating technology, energy, gas and drinking water supplies

as well as a wide variety of special products for private and industrial use.

innovations in plastic pipesClimate change and the increasing development of green areas have led to a growing incidence

of flooding in inner city areas. With RaineoTM, Pipelife has developed an extremely efficient

system to solve this problem. The heart of the system is the socalled “Stormbox”, a plastic water

storage container that is installed below ground. A sophisticated click and stack system allows

for the construction of underground water storage facilities in various sizes. When the rain is

heavy, the water overload is collected in the box – where it is gradually released into the connected

sewerage system and, in this way, prevents flooding.

Pipelife took an important step to meet an emerging global trend – Long Length Large

Diameter pipes (LLLD) for industrial facilities – and is currently the only producer in the world

that can manufacture pipes with a diameter of up to 2.5 meters and a length of up to 600 meters.

These pipes are extruded directly into the sea and transported by barges to operating sites around

the globe (e.g. Morocco, Ghana, Ukraine and South America). Another special product, the

“Soluforce Heavy Pipe”, was developed especially for high pressure applications in the oil and gas

industry. Steel wire reinforcement makes these pipes extremely pressureresistant. In addition,

a plastic liner ensures high resistance to aggressive chemicals and corrosion, which creates a

significant advantage over conventional steel pipes in these industrial applications.

With the development of the EMC electrical installation pipe, Pipelife has minimized electro

magnetic radiation into the immediate environment and improved the quality of life for residents.

CompoSys is a fully compostable aeration and irrigation pipe for the cultivation of young trees

in tree nurseries, which is made of potato starch and polylactide (a lactic acidbased thermoplastic).

The pipe dissolves underground in three to five years without leaving any residue and thereby

makes a contribution to protecting the environment and minimizing waste.

The DUETATM geothermal pipe was developed especially to extract geothermal energy from

highdepth drillings. An integrated distance holder makes this pipe easy to install and guarantees

optimal heat and energy generation for building heating.

Pipelife plastic pipes cover a broad range of applications

The RaineoTM system prevents flooding in urban areas

LLLD pipes and SoluforceTM as made-to-order products for industrial applications

Pipes to protect people and the environment

Special pipe for geothermal energy generation

28


Ceramic pipesSteinzeugKeramo produces glazed ceramic pipes, fittings, shafts and accessories for use in

open and closed sewerage systems. These pipes are characterized by stability, easy maintenance

and resistance against wastewater, and therefore meet the many demands placed on modern

sewerage systems.

innovations in ceramic pipesAt SteinzeugKeramo innovation is concentrated, above all, on optimizing the technical

properties of the products. One example is the development of ceramic jacking pipes that are

suitable for trenchless installation. The pipes are inserted into a starting shaft and then pushed

to the target shaft by means of a tunneling machine, thus avoiding any excavation. This environ

mentally compatible procedure allows the pipes to be installed with only minimal earth move

ments and without disturbing the existing infrastructure. The technique can also be used to

replace existing pipelines without digging new trenches.

SteinzeugKeramo was awarded the Cradle to Cradle® sustainability certificate for its prod

ucts. The underlying principle behind the Cradle to Cradle® concept is that the components

remaining after the use of a product must be fully recyclable. Vitrified clay pipes are made of

100% natural, recyclable raw materials and therefore meet the demanding ecological criteria for

this certification.

Concrete paversConcrete pavers are used in many different applications – from public areas, streets and roads

to private homes and gardens. The product line includes concrete pavers and slabs, wall and fencing

systems, design elements such as steps, palisades and edgings as well as an extensive infrastructure

program. The large range of shapes and surface structures places virtually no limits on the esthetic

fantasy of landscaping solutions with concrete pavers. Continuous optimization and improvement

are the focus for these products, which deliver especially brilliant colors and design quality with

their high quality blend of natural stone aggregates on the surface.

innovations in concrete paversInnovation at Semmelrock is directed to extending the service life and improving the economy

of products. Semmelrock Premium Protect®, a special surface shield, seals the stones and thereby

provides for longlasting color protection and easy maintenance, even on areas that are exposed

to heavy soiling. Einstein®, an innovative jointing system, was developed to meet the high demands

on heavily trafficked areas. When installed professionally, this fully interlocking system with

integrated protection against shifting prevents the paved areas from displacing, tilting or warping,

even under high stress.

Ceramic pipes for sewerage systems

Jacking pipes for trenchless installation

Steinzeug-Keramo receives Cradle to Cradle® sustainability certificate

Semmelrock concrete pavers for high-quality design in open spaces

Innovative engineering and surface protection

29

The Companyproducts and System Solutions

Wall – clay blocks

Our hightech clay blocks are available

in a wide variety of sizes with different

void patterns and construction proper

ties. High thermal insulating clay blocks

for exterior walls, heavy clay blocks for

improved sound insulation, seismic

resistant clay blocks and clay blocks

for infill masonry: we offer the best

possible solution for every construction

challenge and create an unmistakably

pleasant and healthy indoor climate

with walls made of bricks.

The Wienerberger product World

Facade – facing bricks

We have expanded our innovative line

of facade bricks to also include facade

systems that are mounted with verti

cal steel profiles on buildings and are

therefore particularly well suited for

highrise construction and modern

architecture.

Roof – clay roof tiles

Clay roof tiles provide lasting protec

tion from the weather and moisture,

and also represent an important

design element for architects.

The Wienerberger roof tile product

line includes several 100 models

in various shapes, colors and surface

structures as well as an extensive

range of technical accessories.


30

Plastic pipes

Plastic pipes (including fittings and

accessories) can be used in a wide

variety of applications. The product

portfolio includes system solutions for

building installations, drinking water

supply, irrigation, wastewater and rain-

water management, energy supply and

drainage as well as special products for

industrial applications.

Ceramic pipes

Ceramic pipes, fittings, shafts and

accessories are used to create

system solutions for modern municipal

wastewater disposal in open and closed

sewerage networks.

Concrete pavers

Pavers made of concrete are charac-

terized by high resistance and lasting

esthetics. They can be used in many

different types of applications – from

public areas, streets and roads to

private homes and gardens.

Pipes & Pavers

31

The CompanyThe Wienerberger Product World


32Status December 2013

Wienerberger is the only multinational producer of bricks, roof tiles, concrete

pavers and pipe systems with a total of 214 plants in 30 countries and four export

markets, including one plant in India. We are the world’s largest producer of bricks

and number one on the clay roof tile market in Europe. Furthermore we hold

leading positions in concrete pavers in Central-East Europe and pipe systems

in Europe.

6

5

3 1

11

1

1

2

3

56

6 4

1

1

1

21

Wisconsin

Tennessee

Virginia

New Jersey

New York

Mississippi

North Carolina

PennsylvaniaIllinois

Alabama

Kentucky

Indiana

South Carolina

Michigan

Ohio

Georgia2

Delaware

Maryland

2 Ontario 1

Quebec1

1

11

2

Montana

Nebraska

Wyoming11

1

Colorado2

11

Oklahoma

1

Utah

Arkansas

42

1

22

2

27

1 1

2

1

1

3

4

1

2

2

3

West Virginia

Market positions

Facing bricksConcrete productsDistribution outletsPipelife

3 2 1Number of sites

Facing bricks1

1

Wienerberger Markets in North America

32

Plant Sites and Market Positions

Market with plant sites Export markets

Croatia

Czech Republic

Russia

France

Poland

Switzerland

Belgium

Slovakia

Netherlands

Finland

Hungary

Slovenia

Great Britain

9

4

1

7

46

2

5

1

Denmark2

Italy

4

1 1

1 21

2 1 1

8

5

3

8

2 2

Serbia

Romania

32

Bulgaria1 1

Macedonia

Greece Turkey

1

Estonia

35

2 2

1

2

3

2

3 3

4

1

1

1

1 1

1

1

1

11

1

11

1

1

1

2

2

1

1

4

1

1

1

1

1

2

11

11

1

1

1

21

3

Germany

15

35

1 12

Norway1

2

Sweden1

2

8

21

52

11

Ireland1

1

1 1

1

Austria

6

12 3

1

2

1

1 1

2

3

Clay blocksFacing bricks Roofing systemsPaversPipelife Steinzeug

4 3 2 11 1Number of sites Clay blocks

1Number of sites

Clay blocks and/or facing bricks

Clay roof tiles

Clay roof tiles – Tondach Gleinsstätten (50%)

Market positions

1

1

1

Wienerberger Markets in Europe

Wienerberger in India

33

The CompanyPlant Sites and Market Positions


34

Strategy and Business modelStrategic focus on organic growth

Wienerberger has created a strong and healthy foundation for organic growth with extensive

restructuring measures and targeted growth steps over the past five years. In order to bring the

corporate structure in line with the market, fixed costs were cut by approx. € 250 million and

working capital as a percentage of revenues was substantially reduced. These structural measures,

which were accompanied by a restrictive investment policy and strict management of the maturity

profile of financial liabilities, were successfully concluded. Targeted takeovers led to the develop

ment of new business areas and expanded the Group’s industrial base, while additional strategic

flexibility was created through the gradual adjustment of the investment portfolio.

We are now a marketoriented company with a healthy corporate base and a focus on organic

growth. Our customers are the focal point of our actions – we want to create added value for

them with innovative, highquality and useoriented system solutions. Comprehensive advising

and service, starting with the project planning stage, are an important part of our improved sales

activities. In this way, we develop longstanding customer relationships and can integrate our

detailed understanding of our customers’ needs in the development of new products and services.

The strategy for our core business is designed to establish and extend leading positions in all

markets in which we are present.

Another central goal is to reduce Wienerberger’s dependence on new residential construction

and expand activities in the areas of renovation and infrastructure. The acquisition of

SteinzeugKeramo, the market leader for ceramic pipes in Europe, and the purchase of the

remaining 50% stake in Pipelife, one of the leading producers of plastic pipes, established the

Pipes & Pavers Europe Division and completed Wienerberger’s transformation into an international

system provider of building materials. This division, which also includes the concrete paver

business in CentralEast Europe, made an important contribution to Group results in 2013 with

revenues of approx. € 1 billion and operating EBITDA of roughly € 100 million. These growth

steps reduce the dependence on cyclical new residential construction from approx. 70% to roughly

60% of revenues and create opportunities in new areas of business with a longterm, sustainable

growth potential.

In addition to organic growth, our strategic focus remains on financial discipline and the

maintenance of a strong capital structure. We will therefore continue to pursue a restrictive

investment policy and hold normal capex substantially below scheduled depreciation. The issue

of a € 300 million bond in April 2013 underscores our efforts to meet our refinancing needs on

a timely basis and maintain sufficient liquidity reserves. This bond allowed us to safeguard our

capital requirements for 2014 and also protects the balanced term structure of our liabilities.

Another important element of our financing strategy is high internal financial strength through

strong cash flows. In our capitalintensive ceramic business, expenditures for maintenance and

the refitting of existing equipment amount to only approx. 60% of depreciation after the sig nificant

initial investment. The resulting free cash flow is available for debt repayment, dividends, share

buybacks and growth projects. In 2013 we were able to reduce net debt by roughly

€ 63 million.

Extensive structural adjustments completed

Clear focus on organic growth

Strategic expansion of core business through establishment of Pipes & Pavers Europe Division

Strong cash flows to finance the operating business and growth investments

35


We define growth investments as acquisitions, capacity expansion and the development of

new product segments or regional markets. The strategic use of funds is based on established

decision processes and strict return goals to ensure that growth steps help us to meet our CFROI

target of 11.5% at the Group level. Our financial discipline also includes an internal target of less

than 2.5 for the ratio of net debt to operating EBITDA at yearend. The last major investments

by the Wienerberger Group, Pipelife and SteinzeugKeramo, clearly exceeded these targets and

have a CFROI of substantially over 11.5%.

Our focus is currently placed on the selective evaluation of smaller, profitable transactions

in our core business with an emphasis on further expansion in the renovation and infrastructure

segments. In the ceramic business, we already have an extensive, modern plant network, sufficient

capacity reserves and strong market positions. The prospects for future acquisitions are therefore

concentrated, above all, on opportunities for sustainable growth and the less capitalintensive

pipe business.

The shutdown of numerous plants in recent years has created a portfolio of nonoperating

real estate, which we are now selling in a structured process. Our goal for the period from 2012

to 2016 is to generate proceeds of approx. € 100 million from the sale of this real estate. These

transactions, which are managed centrally but implemented locally, exceeded our expectations

in 2013. Since the start of the program, we have sold properties with a market value of nearly

€ 25 million. Therefore, we should realize a further € 75 million by the end of 2016.

Following the completion of the structural adjustments and the expansion of the core busi

ness, an evaluation of the earnings potential of the Wienerberger Group based on the existing

production network resulted in EBITDA of approx. € 600 million. This analysis is based on the

assumption of a return to a normalized activity level in our most important markets. We see this

normalized level at approx. 1.5 million housing starts in the USA and, depending on the individual

markets, approx. 30 to 40% over the current activity level in Europe.

Strategy in the Clay Building Materials Europe DivisionFor the Clay Building Materials Europe Division, the past years were influenced primarily

by a difficult market environment and a focus on cash generation. The financial crisis led to the

implementation of an extensive restructuring agenda in 2009 that adjusted structures to reflect

the market. A further market decline, especially in Western Europe, resulted in the implemen

tation of additional optimization and restructuring measures in the Clay Building Materials Europe

Division during 2012. This program will lead to a reduction of roughly € 50 million in fixed costs

by the end of 2014. It includes the mothballing of plants, the adjustment of shift models and the

optimization of administration and sales. Most of the savings from this Groupwide program are

attributable to the Clay Building Materials Europe Division, in particular the West European

markets of France, the Netherlands, Belgium and Germany.

Clear goals for the use of funds

Focus on the evaluation of smaller, value-creating transactions

Structured sale of non-operating assets

Wienerberger Group: EBITDA potential of approx. € 600 million

Difficult markets lead to structural adjustments for Clay Building Materials Europe

The CompanyStrategy and Business model

36

The Clay Building Materials Europe Division has a modern industrial base with lean cost

structures and an efficient plant network. The division has significant organic growth potential

in the form of capacity that is currently not in use, but can be reactivated once demand in our

most important markets normalizes. Roughly half the realized fixed cost reductions are sustain-

able, and we are therefore in a position to generate a sound increase in earnings when the markets

recover. Since an increase in capacity utilization would only lead to a moderate rise in normal

capex and the need for growth capex is low, we can also generate strong cash flows.

Our strategic medium-term planning for the realization of organic growth is focused on

market orientation, product development and operational excellence. We want to design our

customer relations as an ongoing dialogue in order to optimally coordinate the development of

our innovative products and system solutions for the energy-efficient and healthy construction

of the future with the needs of our customers. The continuous optimization of cost structures

to strengthen the division’s profitability will also remain a focal point of activities after the

con clusion of the extensive restructuring measures. We see an EBITDA potential of approx.

€ 400 million for the Clay Building Materials Europe Division, assuming demand returns to

a normal level.

Strategy in the Pipes & Pavers Europe Division The Pipes & Pavers Europe Division includes Wienerberger’s plastic pipe activities, ceramic

pipe activities and the concrete paver business. The division’s product portfolio covers system

solutions for building installations, fresh water supply, irrigation, wastewater and rainwater

management, drainage, energy supply and data transfer as well as special products for industrial

applications and pavers. Our focus for Pipes & Pavers lies, in particular, on the continuous

de velopment and innovation of the product portfolio.

Above-average growth is expected over the coming years, above all, in the areas of fresh water

and wastewater management due to the renovation backlog in Western Europe and the planned

increase in supply network coverage in Eastern Europe. The growing demand for electricity and

the expansion of telecommunication networks will also lead to increased demand for cable and

electrical installation pipes in the future. The market shares of plastic pipes are growing steadily

in com parison with competing metal and concrete products and outpacing the market. Over the

medium- to long-term, we therefore see an EBITDA potential of approx. € 140 million for the

Pipes & Pavers Europe Division.

Strategy in the North America Division In the North American brick business, Wienerberger has a modern, highly efficient plant

network and its own sales centers. A number of our relevant markets recorded a drop of up to

75% in demand during the height of the crisis in 2009, and our capacity reserves will therefore

allow us to benefit significantly from the current market recovery. Market research institutes

assume the continuation of recovery in 2013 will be followed by a further rise in residential

construction to over one million housing starts for the first time since 2007 and see a normalized

market level of roughly 1.5 million housing starts. In the pipe business, which operates from a

base in Arkansas, we are focusing on applications in the areas of water management and

Substantial organic growth potential

Clay Building Materials Europe: EBITDA potential of € 400 million in normalized market environment

Strategic focus for Pipes & Pavers Europe on the further development of the product portfolio

Pipes & Pavers Europe: EBITDA potential of € 140 million

North America: EBITDA potential of € 60 million


highpressure applications for the oil and gas industry. We are actively driving the substitution

trend to plastic pipes in this business and working to expand our customer base, above all in the

oil and gas industry. We see an EBITDA potential of approx. € 60 million in the North America

Division based on normalized conditions on the new residential construction market.

Sustainable increase in the value of the companyThe foremost goal of our entrepreneurial activities is to create and maintain a sustainable

increase in the value of the company in accordance with ecological, social and economic principles.

Accordingly, we work to create added value for all our stakeholders.

– For our employees, the positive development of our company means stable jobs with fair

and healthy working conditions and performancebased remuneration.

– Our customers benefit from sustainable, longlasting and innovative products that guarantee

energyefficient, healthy living and supply security.

– Our products and system solutions make an important contribution to the attainment of climate

protection and emission goals with their resourceefficient production and their long service

life. We are also well aware of our responsibility to society and provide targeted inkind support

to the needy in the form of products or training programs.

– Our owners participate in the sustainable increase in Wienerberger’s value in the form of higher

share prices and dividends.

After the conclusion of extensive restructuring measures and the successful strategic refocusing,

Wienerberger is well positioned to benefit from future recovery in residential construction and growth

in the pipe business. We have a modern, efficient plant network, a strong capital base, lean cost struc

tures, high innovation capability, durable and innovative products and committed, skilled employees.

These success factors should allow us to realize the available EBITDA potential of approx. € 600 million

at the Group level over the medium and longterm in a normalized market environment.

Sustainable creation of added value as top corporate goal

Wienerberger is well positioned to benefit from market growth

37

The CompanyStrategy and Business model

38

Success Factors and major Drivers

Strong capital structure through genera-

tion of high cash flows

Product development & innovation

Our sound capital structure and internal financial strength form a healthy base for financing our operating business and growth investments. In our capitalintensive ceramic business, only approx. 60% of depreciation is required for maintenance and the refitting of existing equipment after the high initial investment. The resulting free cash flow is available for debt repayment, dividends, share buybacks and growth projects. The framework for our strong capital structure is based on our strategic goal for the use of funds, which sets a limit of 2.5 years at yearend for the ratio of net debt / operating EBITDA. We also ensure that financial liabilities are refinanced on a timely basis and issue bonds in smaller tranches to optimize our maturity profile.

Our work is focused on solutions to provide our customers with energyefficient, healthy housing and supply security for water, electricity and gas. In order to meet our own claims for futureoriented products, we aim to be the innovation leader in all businesses in which we are active. At numerous locations our experts are working on innovative products and system solutions as well as new and more efficient production processes. Wienerberger’s sales staff is closely involved in product development to ensure that our innovations optimally meet the needs of our customers. Our goal is to generate 30% of our revenues with innovative products by 2015.

39

Cost & capacity manage-

ment

Market orientation & customer

relations

Our goal is to create maximum added value for our customers with our products and services. We offer a broad portfolio of highquality, sustainable building materials and system solutions as well as extensive advising and services. One of the most important requirements to meet this goal is the close integration of product development, market orientation and customer support. We therefore work continuously to expand our network of customers and decisionmakers for construction and infrastructure projects to include market trends and regulatory changes in the development of our innovative products. That allows us to optimally adjust our product line to meet customers’ needs and to design our customer relations as an ongoing dialogue.

Strict cost management and the con tinuing optimization of our plant network and internal processes will remain an integral part of the Wienerberger culture, even after the conclusion of the extensive measures to bring our structures in line with the market. These measures are managed and supported centrally, but implemented locally. The most important projects currently in progress involve supply chain management, the optimization of energy costs (environmental action plan) and working capital management. Our goals are to steadily strengthen profitability in all areas of the corporation and to improve our competitive ability.

Our goal is to develop strong market positions and customer relations in all markets in which we are active and to continuously improve in these areas of our business. We want to be one of the three leading suppliers in each of our relevant markets and, when possible, to become the market leader. Wienerberger is the largest producer of clay blocks and facing bricks in the world with 166 plants as well as the number one in clay roof tiles in Europe. With a further 31 plants in the pipe systems segment, we are also one of the leading suppliers of ceramic and plastic pipe systems in Europe. In CentralEast Europe, we are the market leader for concrete pavers with 17 plants.

Strong market

positions

The CompanySuccess Factors and major Drivers


40

Mr. Scheuch, Mr. van riet: you’ve given us

a positive review of the 2013 financial year.

What were the most important factors for

this success?

Heimo Scheuch: Many of our major mar

kets continued to decline in 2013, and the

bad weather had a negative effect on

business development during the first six

months. The key to success in the past

year was, above all, the progress we made

as a result of our internal strength. We

implemented the restructuring program as

planned and, at the same time, invested in

innovative products and the necessary

production equipment. The expenditures

for these types of investments are

comparatively low, but they form the basis

for strengthening our market positions.

Pipelife also recorded sound development

during the past year. The newly estab

lished Pipes & Pavers Europe Division

made an important contribution to Group

results with approx. € 1 billion of

revenues and roughly € 100 million of

EBITDA. In conclusion, our broader

industrial base and internal measures

provided the ground for a substantial

improvement in revenues and earnings.

Willy van riet: We again proved that we

can generate strong free cash flows in a

difficult market environment. In 2013 we

used free cash flow primarily to reduce

debt. Over the mediumterm that will

give us added strategic flexibility to uti

lize opportunities for growth. Our very

successful placement of a € 300 million,

sevenyear bond in April 2013 also

underscores our good access to the capital

market. We have a healthy financial base

in the form of a strong balance sheet

structure and sufficient liquidity reserves,

which are available to refinance the

liabi lities maturing in 2014.

Heimo Scheuch: In summary, I would like

to highlight the following: we implemented

wideranging measures in all areas of the

company to align our structures with the

market. These measures included, among

others, the optimization of the production

network and administrative organizations

and the reorientation of the Group’s

financing. The result is a solid, healthy base

that will support strong organic growth.

your forecast for 2014 calls for operating

eBitDa of € 300 million at the group

level. in which areas of the company do you

see the greatest potential?

Heimo Scheuch: We plan to conclude our

restructuring program in 2014 and realize

roughly € 17 million in additional savings.

The sale of our noncore real estate will

also continue. One particularly important

factor is our cautiously optimistic evalu

ation of the market situation. Even though

demand is still expected to decline in

individual markets during 2014, we see

general stabilization to slight growth

in Europe and continued recovery in the

USA. A resulting moderate increase in

volumes should therefore lead to a signifi

cant improvement in earnings.

Interview with the managing Board

41

In all areas of our business, we are active

in promising markets. The Clay Building

Materials Europe Division has the greatest

potential for earnings improvement.

Our extensive network of modern and

efficient plants – meaning capital we have

already invested – gives us an opportunity

to benefit disproportionately from a

market recovery. The demand backlog

grows with every year we remain at this

low, unsustainable level. Nonetheless, we

are still confronted with weak consumer

confidence and limited bank lending

because of the slow economic growth

and high unemployment.

I would also welcome strong, direct actions

by politicians. Affordable and livable

housing is becoming an increasingly critical

issue that also requires the support of

political decision-makers.

The business environment in your core

markets is stabilizing, and you have

a strong balance sheet and high liquidity

reserves. Will your focus now shift to

acquisitions?

Heimo Scheuch: We have never cate-

gorically excluded takeovers, and I want

to emphasize that we took a number of

The CompanyInterview with the Managing Board


42

important development steps in recent

years with Pipelife, SteinzeugKeramo,

the increase in our stakes in Tondach

Gleinstätten and Semmelrock as well as

a number of smaller transactions. In

addition I would like to highlight, that

our two major acquisitions – Pipelife and

SteinzeugKeramo – have been very

successful and significantly exceeded our

11.5% Group CFROI target in 2013.

We plan to continue this strategy in the

future and selectively pursue value

creating opportunities. However, our main

objective is to further strengthen our

market positions in the core businesses

and expand our presence in the areas of

renovation and infrastructure.

Willy van riet: Independent of takeovers

or other growth investments, financial

discipline and the maximization of free

cash flows remain our top priority.

In 2014 we will therefore meet our goal

to hold the ratio of net debt to operating

EBITDA below 2.5 at yearend. I also

want to add that earnings growth does not

necessarily mean a corresponding increase

in net debt. We are very comfortable with

our 2.5year target in the current market

environment. However, that doesn’t mean

we won’t reduce this target in the future

to hold net debt at a sustainable level.

you can exercise the call option for

the hybrid bond starting in 2017. are there

any plans for refinancing this security?

Willy van riet: First, I would like to

make one very important point:

only Wienerberger is entitled to decide

whether or not the option will be

exercised. If we decide not to use this first

window, the interest rate on the bond will

change from the current 6.5% per year

to a variable interest rate that is based on

the 3month EURIBOR plus 325 basis

points. In spite of the currently low

borrow ing rates, I see the hybrid bond as

an attractive component of our financing

strategy because it is reported as equity in

accordance with IFRS. We regularly

evaluate measures to optimize our capital

structure and, in the end, will base our

decisions on the economic environment

and the situation on the capital markets.

43

Numerous measures were taken to adjust

structures in recent years, above all the

optimization of the plant network.

How does Wienerberger in 2014 compare

with 2007, and what are the underlying

assumptions for your € 600 million

estimate of the Group’s EBITDA potential?

Heimo Scheuch: We closed nearly

70 plants during these seven years, includ-

ing roughly 15 that are still mothballed,

and will have saved approx. € 250 million

of fixed costs through these measures

by the end of 2014. These extensive

adjustments to the corporate structure

were implemented under the condition

that neither our market coverage nor the

depth of our product portfolio would be

impaired. Since we also made acquisitions

and built new plants during this time,

our analysis of the Group’s EBITDA

potential focused on the current capital

base and the assumption of normalized

market levels. These levels were deter-

mined on the basis of macroeconomic data

and internal estimates. They are oriented

primarily on demographic trends, the size

and quality of the existing housing stock,

migration and long-term average housing

starts per thousand residents. The results

show that the USA will return to roughly

1.5 million housing starts and the normal-

ized market level in Europe is 30% to 40%

higher than construction in 2013, depend-

ing on the country. Our announced

estimate of € 600 million is based on the

realization of this growth potential. I want

to emphasize that these normalized levels

are clearly below the pre-crisis highs,

with the exception of a few markets

in Eastern Europe where the pent-up

demand did not materialize before

the crisis. The EBITDA potential derived

from our analysis is higher than the

record EBITDA of approx. € 550 million

generated in 2007 because of

Wienerberger’s broader industrial base

and leaner cost structures.

The interview was conducted on March 3, 2014 by Klaus Ofner, Head of Investor Relations.

The CompanyInterview with the Managing Board


44

EmployeesThe average number of employees in the Wienerberger Group rose by 6% to 13,787 in

2013, above all due to the acquisition of Pipelife in the previous year. Revenues per employee

rose by an impressive 7% to € 193,100 for the reporting year, and operating EBITDA per

employee increased by 3% to approx. € 19,300 (2012: € 18,800).

Human Resources at WienerbergerOur employees are the basis for our success and a key factor for the successful development

of our company. We have therefore identified three focal points for the Groupwide support and

advancement of these men and women: workplace safety, specially designed training concepts

(Wienerberger Academy) and effective succession management. The appointment of the right

people to key strategic positions and structured succession planning are two important factors

for the protection of our competitive position. Strategic personnel issues that affect the entire

Group are managed centrally by Corporate Human Resources, while local personnel issues and

the related decisions are the responsibility of the country organizations.

Health & Safety InitiativeThe Health & Safety Initiative that was launched in 2010 represents an important part of

our responsibility toward our employees. This program includes the definition and implemen

tation of safety standards and measures to improve processes and structures and thereby increase

the awareness for occupational safety. The sustainable success of this initiative is underscored by

the declining accident rates in the countries that have implemented all of the safety standards.

Training Specially designed training and development programs form an important part of success

ful personnel development and employee advancement. In order to efficiently use our resources

and knowhow, we are increasing our concentration on Groupwide networks, the creation of

synergies and international knowledge transfer. We also accompany high potentials on their way

to management positions with individual mentoring programs.

In our ceramic business, we have created a permanent facility for various technical disciplines

with the Wienerberger Engineering Academy to protect our competitive advantage in production

over the longterm. The academy offers a variety of modules and programs (basic courses, the

Engineering Academy Advanced and a training program for plant managers) on subjects that

include plant and process optimization as well as energy and cost efficiency. In the Pipes & Pavers

Division, one of the focal points for Pipelife University in 2013 was the further implementation

of Lean Six Sigma. This involved over 14,500 training hours in 11 languages for managers, project

managers and employees in 18 countries.

45


Wienerberger has also developed a special training program for the future talents identified

through separate analysis processes, which prepares the participants for key positions in the

company. The success of the first Ready4Excellence program in 2012/2013 – with 22 participants

from 12 countries – will be followed by further courses in 2014 and 2015. The Ready4Excellence

program covers four modules that address skills and specialized knowhow on project communi

cations, performance indicators, process and conflict management, product lines and intercultural

competence. The participants are supported by members of Wienerberger management and profes

sional trainers in their personal growth and the continuous development of the corporate culture.

Succession management and corporate cultureIn order to ensure continuity in positions that are critical for Wienerberger’s success, we

improved the processes for structured and systematic succession management and further profes

sionalized our succession planning in 2013. The first step involved the designation of key positions

in all business units and the preparation of succession concepts. We also identified internal talents

and highpotentials who will be gradually developed over the coming years as successors for these

key positions through specially designed training programs. This process will protect our ability

to fill key management positions at the right time with the right people who share our values. A

central role in this process is played by the corporate culture, which makes our shared values

understandable and visible and forms the foundation for our organization. We worked intensively

with and on our values at all levels of the company in 2013 to create an even greater awareness

for the importance of our corporate culture. Through continuous communications and established

practice, we want to anchor and live these values even stronger in the Group. We are committed

to the principles of sustainability, respect for other cultures and opinions and entrepreneurial

thinking and actions. Our human resources policies are also centered on these guidelines. The

selection and development of employees on the basis of our shared values – quality, passion,

customer orientation, expertise, integrity and respect, entrepreneurship, responsibility – is a focus

of our efforts and was continued with various measures in 2013.

Long-term remuneration modelWienerberger places high value on the sustainable development of the company. Con sequently,

the remuneration system for our top management is based, among others, on the attainment of

medium and longterm corporate goals (longterm incentive (LTI) program). A new structure

was introduced for the shortterm variable remuneration component for top and senior manage

ment in 2013. These bonuses are now linked to operating profit goals as well as cash flow goals

and paid out over two years. The oneyear delayed payment of this component is tied to the

repeated achievement of the goal in the following financial year. Our remuneration system is

therefore based not only on the sustainable development of the company, but also on the interests

of our shareholders.

Ready4Excellence: training and international know-how exchange for future talents

Structured succession management in the Wienerberger Group

Long-term remuneration model for top and senior management to support the company’s sustainable development

The CompanyEmployees

46

production

Plastic Pipe Production

The plastic raw materials are first mixed together to create the properties for a specific product group and then heated. The melting process requires a temperature of approx. 200°C, depending on the raw material mixture.

Mixing and melting

The pipes are then packed and delivered to the customer. A decentralized network of 27 plastic pipe plants in 27 countries positions us close to our customers and normally provides for short transport routes.

Packaging and delivery

In the plastic pipe business, our most important raw materials include PVC, PP and PE granulates. We only use materials that do not represent a risk for the environment during the production, use or disposal of the pipes. No plasticizers are used. As a member of local initiatives like Responsible Care in Austria, we regularly evaluate the health, environmental and safety impact of our raw materials and products.

Raw materials

The heating takes place directly in an extruder, which presses the hot moldable plastic mass through a die to shape the pipes. In the socalled casing head, a calibrator ensures the desired diameter, which can range from several millimeters up to 2.5 meters. The accessories for our

1

3

pipes are shaped in forms after the raw materials are heated. After shaping, the pipes are cooled and hardened in a water bath. The continuous pipe string is then cut to the desired length, whereby a length of up to 600 meters can be produced for certain applications.

2

4

Shaping

The most important raw material for our ceramic products (clay blocks, facing bricks, roof tiles and ceramic pipes) is the recyclable raw material clay. We place high value on the greatest possible conservation of resources in clay extraction and the expert restoration of former clay mining sites. Since the clay pits are usually located close to our production facilities, transport routes tend to be short.

Raw materials management

47

Ceramic Production

After brief storage in a mud house, the clay is ready for shaping. It is pressed through dies into the desired shape by extruders and then cut into individual bricks or compressed into forms by automatic presses.

Shaping

After extraction, the clay is prepared through a grinding and milling process. Water, sand and, for some products, poreforming agents (e.g. sawdust, paper fiber) are then added.

Packaging and delivery

In packaging our products, we use particularly thin foils. Transport routes to our customers are short because of our regional, decentralized plant network, which also reduces the impact of our business on the environment.

After drying the products are transferred to a kiln, where they are fired at a temperature of 800 to 1,200°C over a period of six to 36 hours. Firing gives the products a permanent strength and makes them permanently nonflammable and firesafe. Our engineers are working continuously to reduce energy consumption in the drying and firing process. For example, the residual heat from the cooling process is recovered and recycled in the drying process.

Firing

The cut products are then transported on palettes to the dryer. The drying process removes the moisture from the soft products and prepares them for firing. Depending on the type of the product, the drying period lasts between four and 45 hours. The moisture content drops to below 2% during this time.

1

4

5

6

3

2

Preparation

be short.

The cut products are then transportepalettes to the dryer. The drying procremoves the moisture fre fre f om the soft ft fproducts and prepares them for fir fir f ring. D di n the t f th d

1

4

5

66

2

Drying

48

procurementBusiness activities in 30 countries and the decentralized structure of the Wienerberger Group

create a wide range of challenges for the strategic procurement departments in our divisions. Our

goals in this area are to identify synergies in close cooperation with the local business units and

to realize these synergies through coordinated actions on procurement markets. We also work to

improve the efficiency and enlarge the scope of our procurement services on a continuous basis.

Our most important raw material for the production of ceramic products is clay. The strategy

pursued by the Wienerberger Group is designed to ensure sufficient clay supplies over the long

term. Roughly twothirds of required clay reserves are owned by the Group, and the rest are

safeguarded through longterm mining contracts.

Energy is another key input factor. The strategic procurement of energy is centralized in the

Clay Building Materials Europe Division because of its importance. Decisions to set volumes and

prices are made centrally in close coordination with the country organizations and Wienerberger

risk management. Our strategy for the nonregulated energy markets is as follows: 75% of energy

demand is hedged for the next six months, 50% for the next 12 months and 25% for the next

24 months. This hedging is based on a rolling planning process, and prices for part of the required

energy volumes are established for up to three years in advance depending on market trends. The

goals of this process are to improve cost planning and limit price fluctuations. In accordance with

this strategy, we have already hedged part of the natural gas and electricity requirements for 2014.

Energy costs for the Group fell by 2% to € 278.2 million in 2013 due to the volume decline

in the Clay Building Materials Europe Division. Energy costs as a percentage of revenues were

lower at 10.4% (2012: 12.1%), above all due to the initial consolidation of the Pipelife Group

where energy consumption is lower than in the ceramic business. Group expenses for energy can

be classified into 61% for natural gas, 31% for electricity and 8% for other energy sources. Based

on the hedged volume, we expect a slight pricerelated rise in energy costs for 2014.

In the plastic pipe business, our most important raw materials include PVC, PP and PE.

These granulate prices are subject to high volatility because of their close connection with the

price of crude oil. Hedging is not a common industry practice in this area because the price fluc

tuations are frequently shortterm. However, the development of raw material prices is monitored

continuously by a central procurement department and the results are reported to top manage

ment. Another focal point is the strict management of selling prices for our products.

Machinery and equipment for the production of our ceramic products, pipes and pavers are

purchased centrally. Close, regular contacts between the procurement managers in our divisions

help to realize synergies in the purchase of various input factors, above all in the areas of packaging

and maintenance.

Strategic procurement departments help to realize synergies

Clay supplies secured over the long-term

Strict price management for plastic pipes

Regular exchange of information by divisional procurement managers

49


Professional investor relations have had a high priority at Wienerberger for many years. This

function reports directly to the Chief Financial Officer, but its work is also closely integrated

with the Chief Executive Officer. The primary goal of our investor relations activities is to estab

lish and maintain open and active communications with Wienerberger investors and shareholders

to ensure the best possible transparency. In line with international practices, we maintain a quiet

period prior to the announcement of earnings and parallel to the trading blackout for Wienerberger

employees. We are aware that this places a limit on communications with investors, and we reserve

the right to cancel the quiet period at our discretion.

Wienerberger also held numerous road shows and participated in investor conferences

throughout Europe and the USA during 2013. The Managing Board and the Investor Relations

team met roughly 630 investors and analysts personally during the past year, and discussed the

company as well as its development and strategy in conference calls and video conferences. The

Capital Markets Day in the USA during September also gave management an opportunity to

provide the nearly 30 international participants with detailed insight into the Wienerberger Group

and its North American activities. The presentation slides from this event can be found on our

website.

The Wienerberger website represents an important communications medium and provides

a wide range of information on the company. Included here are online versions of the annual and

interim reports, press releases and adhoc announcements, a financial calendar, current presenta

tions, live webcasts of the Annual General Meeting, press conferences and conference calls (and

recordings) and analysts’ earnings estimates. A free app for iPadusers makes it possible to down

load the annual report, quarterly reports and the sustainability report.

Wienerberger’s commitment to maximum transparency and quality in reporting was also

confirmed by numerous national and international awards in 2013. Wienerberger was recognized

by trend magazine at the Austrian Annual Reporting Award for the best sustainability report. At

the international ARC Awards, Wienerberger received Gold Awards in the categories “Overall

Annual Report” and “Chairman’s Letter”. In the “Annual Report on Annual Reports” – one of the

most challenging international rankings – an independent expert jury rated Wienerberger’s 2012

annual report 14th among 400 submitted reports after global players like Adidas, Volvo and

Elektrolux. This represents the highest ranking by an Austrian company.

The coverage of our company by a large number of wellknown Austrian and international

investment banks maintains the visibility of the Wienerberger share in the financial community.

As of March 2014, Wienerberger was covered by 13 analysts. The following brokers publish regular

reports on Wienerberger and its stock (in alphabetical order): Baader Bank (Munich),

Berenberg Bank (London), Citigroup (London), Davy Securities (Dublin), Deutsche Bank

(Vienna), Erste Bank (Vienna), Exane BNP Paribas (London), Goldman Sachs (London),

HSBC Trinkhaus (Düsseldorf), Kepler Capital Markets (Vienna), Main First Bank AG (Frankfurt),

Raiffeisen Centrobank (Vienna) and UBS (London).

Professional investor relations guarantee high transparency

Regular and extensive contacts with investors throughout the world

Extensive information on the Wienerberger website

National and international rankings confirm the high quality of Wienerberger’s communications

Wienerberger currently covered by 13 analysts

Investor Relations

The CompanyprocurementInvestor Relations

50

Wienerberger Principles of Sustainability Sustainability at Wienerberger is anchored in the corporate strategy and represents an inte

gral part of the corporate culture. This is reflected in all stages of the value creation process.

In recent years our approach to sustainability management has become substantially more

professional and more firmly anchored in the company. Responsibilities for sustainability have

also been clearly defined. In addition to a Groupwide sustainability officer and a sustainability

officer for each business unit, each of our country organizations has designated a person who is

responsible for sustainability and the implementation of the related measures. Additional infor

mation on the institutionalization of sustainability management at Wienerberger is provided in

the management report on page 102.

Our products and system solutions form the focal point of our sustainability strategy.

Wienerberger produces and sells a wide variety of building material products and solutions that

are used for very different applications. One of our most important goals is to create added value

for our customers through our products with their long service life, technical properties, low

impact on the environment over the entire lifecycle and economy. In general, we see sustainability

as a function between the service life of a product and its impact on the environment during

pro duction, transport, installation, use and disposal:

Sustainable management at Wienerberger

Sustainability management is anchored in the organization

Sustainability strategy focused on products and system solutions

Sustainability at Wienerberger

The sustainability of a product increases with its service life. Increasing the service life of a

product reduces the use of resources and the effects on the environment over the entire lifecycle.

In this same way, a reduction in the use of resources based on a constant lifecycle makes products

more sustainable.

Sustainability = service life / impact on the environment

SERvICE LIFE

Impact on the envIronment

SuSTAIN ABILITy =

51


The Sustainable Management CycleAt Wienerberger, sustainability is embedded in all stages of the value creation process.

We see sustainability as an integrated process that creates lasting value for all our stakeholders.

Sustainability begins with our employees. We place high value on their safety, health, advance

ment and development because our success is based on the commitment of a workforce that believes

in sustainability and acts as entrepreneurs. Our focus for production lies on the conservation of

resources and the recycling of materials. We produce innovative, longlasting products and system

solutions for residential construction and infrastructure that create sustainable value. Our commit-

ment to society is demonstrated through measures that are specifically related to our business

activities. In accordance with our donation guideline, we provide inkind support for the needy

with our products and also give young people an opportunity for training in sustainable construc

tion. Our entrepreneurial actions are designed to create sustainable added value for all our stake-

holders, which completes the cycle.

Sustainability report as part of a continuous processAdditional information on sustainability management at Wienerberger is provided in our

2012 sustainability report and on our website. The sustainability indicators for 2013 will be

published on June 24, 2014.

In nearly all countries where Wienerberger is present, we promote a variety of projects to

support our sustainability strategy. The following two pages present a selection of the projects

that were carried out in 2013.

Sustainability is an integrated process

The sustainable management cycle

Sustainability report on our website

The CompanySustainability at Wienerberger

44 // Responsibilityyforor so society 33 / Sustainable

products

2 / Environmentalprotectioninn production

5 /AAAddded vd value for ourr s sttakakeholders

1 / Development of ef ef mployees

52

Sustainability Projects in 2013

Responsible handling

of resourcesIn 2013 Pipelife launched a number of projects to further improve the efficient use of resources. A new heat exchanger was installed at a Norwegian plant, which not only requires less energy to cool the pipes during production but also uses substantially less water. At Pipelife’s subsidiary in Poland, a project was started to reduce energy consumption by recovering the heat released by the production process and recycling it to heat the production halls. Simple measures that brought significant energy savings – for example, the insulation of production machines – were also implemented at other Pipelife plants. Plans now call for the expansion and roll out of these and other similar projects throughout the company.

Environmental certificate for

pipes and fittings Steinzeug-Keramo products were awarded the Cradle to Cradle® certificate in 2013. This recognition highlights the company’s standing as a pioneer and makes it the only supplier in the pipe industry with life cycle certification. Cradle to Cradle® products must meet demanding ecological criteria and be 100% recyclable. The underlying principle for certification is the use of environmentally compatible, healthy and recyclable materials in a closed cycle. That eliminates waste and conserves resources. This certificate, which is tied to a specific product and the related production process, carries global validity. The certification of Steinzeug-Keramo’s ceramic pipes and fittings by an independent institute is an outstanding acknowledgment that also underscores the sustainability of these products.

400 hectares for protected plants

and animalsTogether with a number of NGOs, our brick subsidiary in the Netherlands celebrated the 20th anniversary of cooperation on the restoration of clay mining sites in 2013. The expert restoration of clay pits as part of the initiative has led to the creation of a huge nature reserve. This 400 hectare area near Nijmegen provides a new habitat for protected animal and plant species and has become one of the most impressive and species-rich nature reserves in the country.

A strong product for greater

safety and energy efficiency

The newly developed ENDURANCE RS4™ STRUCTURAL BRICK is one of the most revo-lutionary products ever launched by Wienerberger’s US subsidiary General Shale. This clay block is an absolute innovation, above all in America where load-bearing walls are normally built with wooden frames. The block is characterized by high static stability and excellent thermal insulation values – which makes it the ideal building material for regions that are frequently hit by heavy storms, tornados or earthquakes. It is not only ideal for residential construction, but also provides greater protection and safety in public buildings like schools, hospitals and police stations.

ProducTS

ProducTioN

Steering committees in

all plantsOur goal is to introduce a continuous, structured dialogue with our stakeholders at 90% of our ceramic production locations by 2020. Wienerberger’s subsidiary in Italy has already set a good example in this respect by establishing stakeholder committees at all its plants in 2013. These committees meet as required with environmental authorities at the regional and supraregional levels as well as with local associations from the districts near the plant. This dialogue is designed to provide neighboring residents and other stakeholders with information on the plant and to learn more about their specific needs. The positive feedback received to date from the participants shows that we are on the right course. We also plan to continue this program in 2014 by extending the dialogue to other countries.

53

Support for health at

the workplace At ZZ Wancor, our brick subsidiary in Switzerland, a special committee is working on measures to improve occupational safety for employees. A pilot project at one location involves mandatory protective glasses for all plant employees, including special optical glasses for employees with visual problems. The costs for these glasses are carried by ZZ Wancor, and the program will be extended to all plants in Switzerland if it is successful. In addition to occupational safety, the company has also implemented a range of measures to actively support employees’ health. Mondays have been designated as health days, and the employees are offered free fruit from the local region as well as information on the related positive health effects. Voluntary blood pressure and blood sugar measurements are also available.

Cooperation with Habitat for

HumanityWienerberger has been working with the NGO Habitat for Humanity for over one year to provide disadvantaged people with safe and livable housing. We provide building materials from all our product lines (walls, roof tiles and pipes), while our employees help out at the construction site free of charge and train other volunteers. We are particularly proud to be involved in the construction of the first hospice in Romania. The hospice in Bucharest has 30 beds for needy patients as well as an outpatient clinic that treats up to 5,700 children and adults each year. Together with Habitat for Humanity, Wienerberger has realized 15 housing units in Romania as well as other social construction projects in Bulgaria, Great Britain and the USA during recent years.

Wienerberger Sustainable

Building Academy (WISBA)

In cooperation with wellknown European universities, Wienerberger introduced an international educational program on sustainable construction in 2013. The Wienerberger Sustainable Building Academy (WISBA) is open to outstanding students from the fields of architecture and construction engineering, and provides additional practical training in sustainable construction. The modules are held in Austria, Germany and Poland, where the students work for one semester on reallife sustainable construction projects in interdisciplinary and international teams under the guidance of experts from various scientific and business disciplines. Completion of the WISBA gives the students five ECTS points toward the completion of their studies. The successful conclusion of the first course will be followed by the expansion of the WISBA to six countries in 2014.

StaKe-HolDerS

eMPloyeeS

Social reSPonSiBility

Our charitable projects are based on our business expertise,

i.e. the provision of building material solutions and knowhow in sustainable

construction. Two initiatives were coordinated and implemented

by corporate headquarters in several countries during 2013.

The CompanySustainability projects in 2013


54

For many years Wienerberger has followed a strategy that is designed to maximize cash

flows in order to create and maintain a sustainable increase in shareholder value. Strict principles

of good management and transparency as well as the continuous development of an efficient

control system form the basis for meeting this goal.

We give the highest priority to providing all shareholders with the same comprehensive

information. To prevent insider trading, we have released a compliance guideline that

implements the provisions of the Issuer Compliance Code published by the Austrian Financial

Market Authority. A compliance officer monitors the observance of these rules. A code of

conduct based on the Austrian Lobbying Act covers all corporate bodies and the employees of

Austrian companies in which Wienerberger AG holds a controlling interest. This code defines the

principles for lobbying activities and can be reviewed on the Wienerberger website

(www.wienerberger.com).

The Austrian Corporate Governance Code (see www.corporate-governance.at) was enacted in

October 2002 and last adapted as of July 1, 2012 to reflect the latest amendments to the Austrian

Stock Corporation Act and the Commercial Code, in particular regarding the remuneration system

for directors and the composition of the supervisory board of publicly traded companies. The foun-

dation of the code is formed by Austrian stock corporation, stock exchange and capital market law

as well as the recommendations of the European Commission on the duties of the supervisory

board and the remuneration of directors and the OECD guidelines for corporate governance. The

code provides a framework for corporate management and control. Its guiding principles are

intended to strengthen the confidence of investors in the company and in Austria as a financial

marketplace, and include equal treatment for all shareholders, transparency, the independence of

the supervisory board, open communication between the managing board and supervisory board,

the avoidance of conflicts of interest by bodies of the corporation and efficient control by the

supervisory board and auditor. The code exceeds legal requirements, and compliance is voluntary.

Observance of the code also means that the failure to meet C-Rules (“comply or explain”) must be

explained and disclosed.

Wienerberger was one of the first companies to announce its support for the Austrian Corporate

Governance Code and to commit to compliance with its rules. Wienerberger met all rules and

recommendations of the code (in the version dated July 2012) during the reporting year.

The implementation and correctness of our public announcements is evaluated by the

auditor, KPMG Wirtschaftsprüfungs- und Steuerberatungs AG, in connection with their review

of the corporate governance report; the auditor’s report on this evaluation is published on our

website. The last auditor’s review of the corporate governance report covered the 2013 financial

year and did not lead to any objections over the compliance of our public declarations with the

code. Compliance with the provisions of the code that relate to the auditor was evaluated by the

Audit Committee, which reported to the Supervisory Board that they did not identify any

deviations from the rules of the code in 2013.

CORPORATE GOVERNANCE

REPORT

Corporate Governance at Wienerberger

Implementation of strict principles for good management and transparency

Compliance code to prevent insider trading and code of conduct for lobbying activities

Voluntary observance of Austrian Corporate Governance Code

Wienerberger is the leader for transparency

Evaluation of compliance by KPMG and the Audit Committee

Wienerberger AG

Annual Report 2013

Corporate Governance Report Corporate Governance

at Wienerberger

55

The 144th Annual General Meeting nominated KPMG Wirtschaftsprüfungs- und

Steuerberatungs AG to audit the 2013 consolidated financial statements and the annual financial

statements of Wienerberger AG. In addition to this function, KPMG also provides tax and

financial consulting services for the Wienerberger Group through its global network of partner

offices. Consulting fees charged by KPMG, excluding the audit of financial statements, totaled

€ 0.5 million for the entire Group in 2013 (2012: € 0.5 million). The fees for the audit of the

Wienerberger Group and related services amounted to € 1.8 million (2012: € 2.0 million).

In order to strengthen risk management, Wienerberger has installed an internal audit

department. The Managing Board and internal audit department regularly evaluate operating

processes to strengthen risk management and identify opportunities for improvement, and also

monitor compliance with legal regulations, internal guidelines and procedures. These activities

are based on an audit plan coordinated with the Audit Committee and approved by the

Managing Board as well as a Group-wide risk assessment of corporate activities. In recent years

the internal control system (ICS) was extended to support the early identification and

management of risks and various measures were implemented and reviewed (see page 106 and

108). Internal audit regularly reports to the Managing Board and the Audit Committee on the

audit findings and the internal audit plan for the following year. A management letter prepared

by the auditor and a report by this firm on the efficiency of risk management in the

Wienerberger Group were presented to the chairwoman of the Supervisory Board and discussed

by the entire Supervisory Board.

Wienerberger AG has issued 117.5 million common shares. There are no preferred shares or

limitations on common shares, and the principle “one share – one vote” therefore applies in full.

In accordance with the Austrian Corporate Takeover Act, each shareholder will receive the same

price for his Wienerberger shares in the event of a mandatory offer. Wienerberger AG has no core

shareholder. The company’s shareholder structure is described on pages 104 and 105.

The disclosures required by § 243a of the Austrian Commercial Code can be found in the

following chapters: the composition of Wienerberger capital, types of shares, limitations and

rights as well as the authorization of the Managing Board to issue or buy back shares are

discussed in the notes under point 23 (Capital and reserves) beginning on page 140. The chapter

Wienerberger Shares and Shareholders beginning on page 103 contains information on direct

and indirect investments in Wienerberger capital. The Remuneration Report (pages 64 to 68)

explains the principles of remuneration policy, provides detailed information on the long-term

incentive (LTI) program, and shows the compensation paid to each member of the Wienerberger

Managing and Supervisory Boards as well as an overview of the shares held by these persons.

Current updates on the purchase and sale of Wienerberger shares by members of the Managing

or Supervisory Board are disclosed on the company’s website under Directors’ Dealings. Change

of control clauses are included in the employment contracts with the members of the Managing

Board, the terms of the 2010, 2011, 2012 and 2013 corporate bonds, the 2007 hybrid bond and

the syndicated loans and other loans concluded in 2008 and 2012.

Disclosure of auditor’s fees

Internal audit function further improves risk management

“One share – one vote” applies in full

Disclosures required by § 243a Commercial Code, including change of control clauses

56

In keeping with the spirit of the code, the members of the Managing Board and Supervisory

Board, in particular through their chairmen, regularly confer on the development and strategy of

the company above and beyond discussions conducted during the scheduled meetings of the

Supervisory Board. The Supervisory Board is responsible for decisions involving issues of

fundamental importance or the strategic direction of the Wienerberger Group. The duties of the

Supervisory Board include: appointing and dismissing the members of the Managing Board, pre-

paring nominations to the Supervisory Board for voting by the annual general meeting, approving

the annual financial statements and reporting to the annual general meeting on the annual financial

statements, approving the acquisition or sale of real estate and investments as well as capital

expenditure projects over € 30 million and authorizing the establishment or discontinuation of

areas of business or major changes in the company’s products and services. Depending on the

significance and technical focus, the Supervisory Board also exercises its consulting and control

activities through the following four committees: the Presidium, the Strategy Committee, the Audit Committee and the Personnel and Nominating Committee / Remuneration Committee. The rules of procedure for the Supervisory Board are available for review on our website.

The Presidium represents the company on all legal transactions with the members of

the Managing Board. It decides on issues involving the relationship between the company and

the members of the Managing Board unless the full Supervisory Board or the Personnel and

Nominating Committee is responsible. In accordance with the rules of procedure for the

Supervisory Board, the Presidium consists of the chairwoman and the vice-chairmen of the

Supervisory Board.

The Strategy Committee evaluates the company’s strategy and development and prepares

strategic issues for voting by the Supervisory Board. It is also authorized to approve transactions

and measures that do not require the approval of the full Supervisory Board – in particular capital

expenditures, acquisitions and the sale of property between € 7.5 and 30 million – and also makes

decisions in urgent cases. Peter Johnson, who has many years of experience in the building materials

sector, is the chairman of the Strategy Committee.

The Audit Committee is responsible for all issues related to the annual financial statements,

the audit of the Group and accounting, in preparation for the Supervisory Board. In addition, this

committee monitors the effectiveness of the internal control, audit and risk management systems

and evaluates the independence of the auditor and its qualifications as verified by a peer review. As

financial expert Harald Nograsek serves as chairman on the Audit Committee.

The Personnel and Nominating Committee is responsible for preparing nominations to the

Managing and Supervisory Boards. It recommends nominations to the Supervisory Board, which

are subsequently voted on by the Annual General Meeting. The Personnel and Nominating

Committee establishes a description of the required qualifications prior to the nomination of

persons to the Managing Board or Supervisory Board, and prepares decisions for the Supervisory

Board based on a defined selection procedure and succession planning. In its function as a Remuneration Committee, the Personnel and Nominating Committee deals with the remunera-

tion of the Managing Board members and the content of their employment contracts. Karl Fink,

Supervisory Board rules of procedure reflect the provisions of the code

Duties and responsibilities of the Supervisory Board committees

Wienerberger AG

Annual Report 2013

Corporate Governance Report Corporate Governance

at Wienerberger

57

who has many years of experience in various management board positions in the insurance

industry, serves as chairman of the Personnel and Nominating / Remuneration Committee.

The participation of Wienerberger employees on the Supervisory Board and its committees

through their elected representatives forms a legally regulated part of the Austrian corporate

governance system. The Austrian Labor Relations Act entitles employees to delegate one

member from among their ranks to the supervisory board of a corporation and its committees for

every two members elected by the annual general meeting (shareholder representatives).

The Austrian Corporate Governance Code requires the majority of shareholder representa-

tives on a supervisory board to be independent. A supervisory board member is considered to be

independent when he has no business or personal relationships with the company or its

managing board that may lead to a material conflict of interest and subsequently influence his

behavior. In accordance with this guideline and Appendix 1 of the Austrian Corporate

Governance Codex (in the version dated July 2012), the Supervisory Board of Wienerberger AG

defined six criteria for the independence of its members. A member of the Supervisory Board is

considered to be independent when he:

– did not serve as a member of the Managing Board or key employee of Wienerberger AG or a

Wienerberger Group company during the past five years;

– has no business relations with Wienerberger AG or a Wienerberger Group company of a scope

considered material for that member (the same also applies to business relations with a com-

pany in which the Supervisory Board member holds a significant personal economic interest);

– did not work on the audit of Wienerberger AG and was not employed by and did not hold an

investment in the public accounting firm that performed the audit during the past three years;

– did not serve on the managing board of another company in which a member of the

Wienerberger Managing Board serves on the supervisory board;

– has not served on the Wienerberger Supervisory Board for more than 15 years; and

– is not closely related to a member of the Wienerberger Managing Board or to a person in one

of the above-mentions positions.

The criteria for independence are published in detail on the Wienerberger website. Christian

Dumolin was no longer considered an independent shareholder representative because of his many

years of service on the Supervisory Board of Wienerberger AG, to which he was first elected on

July 17, 1996. After the end of his term of office, Christian Dumolin did not stand for re-election at

the 144th Annual General Meeting and retired from the Supervisory Board on May 14, 2013. The

Supervisory Board of Wienerberger AG had five shareholder representatives as of

December 31, 2013 who reconfirmed their independence in accordance with the above criteria at

the beginning of 2014.

No loans were granted to a member of the Supervisory Board or Managing Board.

Information on related party transactions is provided on page 170 of the notes.

Employee participation on Supervisory Board

Criteria for the independence of Supervisory Board members

Criteria for the independence of Supervisory Board on Wienerberger website

Related party transactions

58

members and Committees of the Supervisory Board5 shareholder representatives

Regina Prehofer independent, born 1956, appointed to 146th AGM (2015), first elected: May 13, 2011Chairwoman ViceRector Financial Affairs and Infrastructure Vienna University of Economics and Business, Second Vice

Chairwoman of the Supervisory Board of AT&S Austria Technologie & Systemtechnik AG, member of the Supervisory Boards of SPAR Holding AG and SPAR Österreichische WarenhandelsAG, BAUMAX Anteilsverwaltungs AG, bauMAX AG and 6B47 Beteiligungs AG

Karl Fink independent, born 1945, appointed to 146th AGM (2015), first elected: April 27, 2006 Vice-Chairman Member of the Managing Board of Wiener Städtische Wechselseitiger Versicherungsverein –

Vermögensverwaltung – Vienna Insurance Group with supervisory board functions in Turkey, Czech Republic, Slovakia and Austria, Chairman of the Supervisory Board of VIG Re zajistovna, Prague, member of the Supervisory Board of AT&S Austria Technologie & Systemtechnik AG

Peter Johnson independent, born 1947, appointed to 148th AGM (2017), first elected: May 12, 2005

Vice-Chairman Chairman of the Supervisory Board of Electrocomponents PLC

Harald Nograsek independent, born 1958, appointed to the 146th AGM (2015), first elected: May 8, 2002 Chief Executive Officer of Österreichisches Verkehrsbüro AG, Chairman of the Supervisory Board of

DDSG – Blue Danube Schifffahrt GmbH, member of the Supervisory Board of Motel One Austria GmbH

Wilhelm Rasinger independent, born 1948, appointed to 146th AGM (2015), first elected: April 27, 2006 Managing partner of InterManagement Unternehmensberatung Gesellschaft m.b.H. and „Am Klimtpark“

LiegenschaftsverwaltungsgesmbH, Chairman of IVA Interessenverband für Anleger, member of the Supervisory Board of Erste Group Bank AG, S IMMO AG and Haberkorn Holding AG, Chairman of the Supervisory Board of Friedrichshof Wohnungsgenossenschaft reg. Gen.m.b.H., Chairman of the Foundation HATEC Privatstiftung Dornbirn

2 employee representatives

Claudia Schiroky delegated for the first time: July 2, 2002; Chairwoman of the Employees’ Council at Wienerberger AG

Gerhard Seban delegated for the first time: February 3, 2006; Salesman at the Hennersdorf plant in Austria, Chairman of the European Employees’ Council, the Central Employees’ Council and the Group Employees’ Council

4 committees

Presidium Regina Prehofer (Chairwoman), Karl Fink, Peter Johnson

Strategy Committee Peter Johnson (Chairman), Karl Fink, Regina Prehofer, Gerhard Seban

Audit Committee Harald Nograsek (Chairman), Wilhelm Rasinger, Gerhard Seban

Personnel and Karl Fink (Chairman), Regina Prehofer, Peter Johnson, Gerhard SebanNominating Committee / Remuneration Committee

Wienerberger AG

Annual Report 2013

Corporate Governance Report Members and Committees

of the Supervisory Board

Managing Board and Management

59

Heimo Scheuch Chief Executive Officer, appointed up to April 1, 2018, born 1966, married

After the completion of legal studies at the Universities of Vienna and Paris and studies at

the Vienna University of Economics and Business Administration and École Supérieure de

Commerce de Paris, he began his career with the legal firm Shook, Hardy & Bacon in Milan and

London as a corporate finance specialist. In 1996 he joined Wienerberger AG as assistant to the

Managing Board; in 1997 he transferred to the senior management of Terca Bricks in Belgium,

where he became CEO in 1999. Heimo Scheuch was appointed to the Managing Board in May

2001 and appointed Chief Executive Officer of Wienerberger AG by the Supervisory Board in

August 2009.

Additional functions: Member of the Supervisory Boards of the Wiener Börse AG and

CEESEG AG, President of the European Bricks and Tiles Federation, Vice-President of

Cerame-Unie and Construction Products Europe.

Willy Van Riet Chief Financial Officer, appointed up to April 1, 2018, born 1957, married, one daughter, one son

After receiving his Masters Degree in Business Economics from the University of Ghent, he

started his career as an auditor and subsequently senior manager with PricewaterhouseCoopers

in Belgium. He has been active in the building materials sector since 1993, first as Chief

Financial Officer of Terca Brick Industries and later Koramic Building Products. In 2004 he took

over the management of Wienerberger Limited in Great Britain. Willy Van Riet has been Chief

Financial Officer of Wienerberger AG since April 1, 2007.

Composition of and Workflows in the Managing Board of Wienerberger AG Wienerberger AG has had a two-member Managing Board since January 2013, with Heimo

Scheuch serving as CEO and Willy Van Riet as CFO. Heimo Scheuch is responsible for the

strategic and operating development of the Wienerberger Group, while Willy Van Riet is in

charge of financial matters.

The foundation for the work of the Managing Board is formed by the joint handling of

strategic and operating issues and the continuous exchange of information. The framework for

these actions is formed by board meetings that are normally held once each week and through

the ongoing exchange of information at the informal level. Frequent contact is also guaranteed

by the set up of offices – the rooms for the board members are adjoining and connected by a

common secretariat. Transactions that require the consent of the Supervisory Board are discussed

in the Managing Board meetings, and the relevant proposals are submitted to the Supervisory

Board after approval. The Managing Board passes its resolutions unanimously and follows the

dual control principle in signing all contracts. Monthly meetings are held with the operating

managers to discuss the development of business, in particular trends in demand, prices and costs

as well as capacity utilization in the Wienerberger plants. Strategic issues are also discussed at

these meetings, with a concentration on the development of markets, products and technologies.

Decisions on necessary measures are taken jointly, but implemented locally by the responsible

operating managers.

Managing Board and Management

Wienerberger Managing Board has two members

Joint handling of strategic and operating issues

60

The management of the company is built on an extensive reporting system. Of special

importance is the monthly report, which includes aggregated data for the Group level and

detailed facts and figures on the divisions, in particular an income statement by country and

product group as well as information on the development of volumes, prices and costs, working

capital and capital expenditure. The Managing Board also receives standardized monthly reports

on the energy and financial situation as well as the status of product and technology projects.

Reports on general market and macroeconomic data in the individual countries and on SHE

(Safety, Health & Education) are provided regularly.

Organizational Structure at the First Reporting Level The first reporting level is structured in four divisions and reflects internal and external

reporting: Clay Building Materials Europe, Pipes & Pavers Europe, North America and Holding &

Others. Managing boards in the individual operating units are responsible for operations and the

implementation of strategic projects. In the Clay Building Materials Europe Division, the country

managers report to the divisional managing board. Wienerberger has also defined three product

groups – wall, roof and facade – whose management reports to the divisional managing board.

The Pipes & Pavers Europe Division comprises three operating units that report directly to the

Wienerberger Managing Board: Pipelife, Steinzeug-Keramo and Semmelrock. In accordance with

the responsibilities of the members of the Managing Board, the CEOs in the operating units

report to the CEO and the CFOs to the CFO of the Wienerberger Group. The various Corporate

Services in the holding company report to one of the Managing Board members in accordance

with the focus of their activities.

Willy Van Riet, Heimo Scheuch

Corporate management based on extensive reporting system

Organizational structure at first reporting level follows the Group’s divisional structure

Wienerberger AG

Annual Report 2013

Corporate Governance Report Managing Board and Management

61

Wienerberger Management

CEO CFO

Management Board Heimo Scheuch Willy Van Riet

Clay Building Materials Europe Christof Domenig Gerhard Hanke

Pipelife Niels Rune Solgaard-Nielsen Marc Vandermensbrugghe

Steinzeug-Keramo Gernot Schöbitz Frank Franco

Semmelrock Robert Holzer Christian Reingruber

Bricks North America Charles Smith Marcel Scheicher

Measures to Support Women The principles of sustainable human resources management at Wienerberger ensure that all

employees have the same rights and opportunities. Discrimination is not tolerated in any form.

Wienerberger traditionally has a high share of male employees because of its concentration on

production. Special efforts are therefore in progress to increase the number of women, above all

in administration and sales as well as mid-level and senior management. One of the implemented

measures involves preferential treatment for women in appointments to senior management

positions when candidates’ qualifications are identical. The share of women in the Wienerberger

Group equaled 13.6% as of December 31, 2013. The share of women in senior management

totaled 6.7% in 2013, while it amounted to 46.6% in administration and 24.0% in sales. The

targets for the share of women in these areas are described in detail in our 2013 Sustainability

Report.

Our support for women and our goal to increase the share of women are reflected in all

areas of the corporation. The Supervisory Board underscored these aims with the election of

Regina Prehofer, the first chairwoman in the history of Wienerberger AG, in December 2013.

The appointment of a woman to the Managing Board is not feasible at the present time because

there are no plans to expand this corporate body.

Clear goals to support women in management positions

Supervisory Board underscores efforts to increase share of women in management positions

62

organization

DiviSionS Clay Building Materials Europe

ProDuct grouPS Clay BlocksFacing Bricks

Roof Tiles

oPerating SegMentS Clay Building Materials

Western Europe

BelgiumDenmarkGermanyEstoniaFinlandFrance

Great BritainItaly

NetherlandsNorwaySweden

Switzerland


Eastern Europe

BulgariaCroatiaAustriaPoland

RomaniaRussia

SlovakiaSlovenia

Czech RepublicHungary

50% inveStMentS Schlagmann Tondach Gleinstätten

ganization

63

Pipes & Pavers Eu rope North America Holding & Others

Plastic PipesCeramic Pipes

Concrete Pavers

Facing BricksPlastic Pipes

Concrete Products

Pipes & Pavers

Western Europe

BelgiumGermanyEstoniaFinlandFrance

Great BritainIreland

NetherlandsNorwaySweden

Pipes & Pavers

Eastern Europe

BulgariaGreeceCroatiaAustriaPoland

RomaniaRussia

SlovakiaSlovenia

Czech RepublicTurkey

Hungary

CanadaUSA

India

ceo cFo

Heimo Scheuch is responsible for the strategic and operating development of the Wienerberger Group. The following Corporate Services report directly to him:

Willy van Riet is responsible primarily for financial matters. The following Corporate Services report directly to him:

Willy Van RietHeimo Scheuch

Corporate Communications: Barbara Braunöck

Corporate Sustainability / European Affairs: Gerhard Koch

Corporate Development: Judith Ableitinger

Corporate Human Resources: Wolfgang Weiss

Corporate Reporting: Helmut Sorger

Corporate IT Architecture & Organisation: Hans Ebner

Corporate SAP Business Applications: Ernst Tschach

Corporate Investor Relations: Klaus Ofner

Corporate Legal Services: Bernd Braunstein

Corporate Treasury: Stefan Huber

Corporate Internal Audit: Gerald Ettmann

64

The remuneration report summarizes the principles that are used to determine the

remuneration for the Managing and Supervisory Boards of Wienerberger AG, provides details on

the amount and structure of payments to these persons and includes data on the number of

shares owned by members of the Managing and Supervisory Boards.

Managing Board Remuneration The goal of the remuneration system is to provide the members of the Managing Board

with compensation that reflects their functions and scopes of responsibility and is appropriate in

national and international comparison and in line with competitors in the building materials

sector. Another important goal is to link the variable component of remuneration to a sustainable

increase in the value of the company. Following the reduction in the Managing Board from three

to two members at the end of 2012, the terms of office for the remaining members were

extended prematurely to April 2018 and the remuneration system was redesigned. The Personnel

and Nominating Committee developed the new system in close cooperation with the presidium

and the support of an external consultant.

The fixed component of remuneration reflects the scope of responsibility of the Managing

Board member and, following common practice in Austria, is divided into fourteen installments

and paid at the end of each month. This results in different base salaries that correspond to the

specific duties as well as the related strategic and operating responsibilities of the individual

board members. In 2013 fixed remuneration totaled € 700,000 for CEO Heimo Scheuch (2012:

€ 658,529) and € 520,000 for CFO Willy Van Riet (2012: € 483,270). The year-on-year increase

in fixed cash remuneration reflected the reduction in the Managing Board as of January 1, 2013

and the resulting expansion of individual responsibilities. The fixed remuneration for the total

Managing Board declined by 27% compared with the previous year. Fixed remuneration for 2014

was set at the 2013 level and will be adjusted in the following years based on the

consumer price index 2010 issued by Statistik Austria or a subsequent index.

Fixed Remuneration in € 2012 2013

Heimo Scheuch 658,529 700,000

Willy Van Riet 483,270 520,000

Johann Windisch 1) 525,293 -

Total 1,667,092 1,220,000

1) Resigned from the Managing Board of Wienerberger AG as of December 31, 2012

Variable remuneration is linked to a sustainable increase in shareholder value and consists

of a short-term and a long-term component. The primary objective of the newly designed

Managing Board remuneration system is to increase transparency by linking targets to clearly

defined earnings and profitability indicators. In addition, delayed payment coupled with the

repeated achievement of targets in the following period was also introduced for the short-term

variable remuneration component.

Remuneration Report

Remuneration report explains amount and structure of payments to Managing and Supervisory Boards

Remuneration system focused on appropriate compensation for Managing Board

Fixed component of salary is based on responsibilities

Redesign of variable remuneration to reflect extended board terms

Wienerberger AG

Annual Report 2013

Corporate Governance Report Remuneration Report

65

The short-term variable remuneration component is tied to the achievement of short-term

corporate goals and determined by the Supervisory Board annually for the next financial year.

The targets include financial (75%) as well as strategic goals (25%). The financial goals are based

equally on EBITDA and free cash flow, whereby upper and lower limits were defined and the

target achievement is determined on a linear basis within this range. The short-term variable

remuneration will equal 100% of fixed remuneration if the financial and strategic goals are met;

the upper limit equals 150% of fixed remuneration. No short-term remuneration is paid if the

minimum limit is not reached. If EBITDA does not reach the minimum level, the component

that is coupled to the strategic goals is also forfeited. The claim based on this target achievement

is paid out in equal parts over two years. In the second year, payment is made if at least 70% of

the goals for the previous financial year were met. Under the assumption that the targets for

delayed payment will be met, the entitlements to the short-term variable remuneration

component in 2013 equal € 427,000 (2012: € 0) for CEO Heimo Scheuch and € 317,200

(2012: € 0) for CFO Willy Van Riet.

The long-term variable remuneration component is designed as a long-term incentive (LTI)

program. In 2010 it replaced the stock option plan that was discontinued in 2009. The LTI

program covers the Managing Board and key Group managers, and was adjusted for all

participants in connection with the redesign of Managing Board remuneration. The LTI program

is designed to focus the actions of managers more on the value-oriented viewpoint of share-

holders and to strengthen their identification with corporate planning and goals. With this LTI

program, Wienerberger fully meets the requirements of the Austrian Corporate Governance

Code for sustainable, long-term remuneration programs for managing boards and management.

The LTI program is renewed each year and involves the allocation of virtual shares, so-called

performance share units (PSUs) (Heimo Scheuch: 110,000 PSUs, Willy Van Riet: 80,000 PSUs).

Special conditions for participation apply to the Managing Board: the CEO must hold at least

90,000 Wienerberger shares and a Managing Board member at least 20,000 shares. The

individual shareholdings may not fall below the defined levels during the program’s term. The

target equals budgeted CFROI for the current financial year. The lower limit is formed by

CFROI for the previous year, while the upper limit corresponds to CFROI for the final year in

the business plan, which is prepared annually for a four-year forecast period. The monetary value

of the PSUs is determined at year-end by multiplying the target achievement with the average

price of the Wienerberger share during the last 20 ATX trading days in that year. The target

achievement is calculated as the difference between the actual CFROI for the respective year

and the defined target and is determined on a linear basis within the target corridor. There is no

payout if CFROI falls below the target corridor. If the upper limit is exceeded, the payment is

capped at 100% of fixed remuneration. Payouts resulting from the target achievement are not

made at once, but in three equal installments. The installment payout will be canceled if the

CFROI in the respective year falls below the actual CFROI in the year the PSUs were granted.

Under the assumption that the targets for delayed payment will be met, the entitlements to the

long-term variable remuneration component in 2013 equal € 700,000 (2012: € 0) for

Heimo Scheuch and € 520,000 (2012: € 0) for Willy Van Riet.

Short-term variable remuneration is tied to the achievement of short-term corporate goals

Long-term variable remuneration component to support sustainable increase in shareholder value

Long-term incentive (LTI) program to synchronize management goals with shareholders’ interests

66

After the Managing Board waived its € 1,066,939 bonus entitlement in 2012 because of the

restructuring program, the targets for short-term and long-term variable remuneration were met

in part during 2013:

Variable Entitlements 1) Payout

Remuneration 2013 in € Bonus LTI Total Bonus LTI Total

Heimo Scheuch 427,000 700,000 1,127,000 213,500 233,333 446,833

Willy Van Riet 317,200 520,000 837,200 158,600 173,333 331,933

Total 744,200 1,220,000 1,964,200 372,100 406,666 778,766

1) The above amounts represent the entitlements earned during the respective financial year, under the assumption that the targets for delayed payout will be met.

The members of the Managing Board are covered by defined contribution pension

agreements that require the company to make a fixed contribution each year. The company has

no obligations above and beyond these agreements. Contributions to pension funds (defined

contribution commitments) on behalf of the Managing Board amounted to € 502,449 in 2013

(2012: € 1,189,570). Of this total, € 236,243 are attributable to Heimo Scheuch and € 266,206

to Willy Van Riet. The substantial decline in pension expenses resulted from the reduction in the

size of the Managing Board from three to two members as of December 31, 2012.

The members of the Managing Board are entitled to severance compensation on the

termination of employment in accordance with legal regulations in Austria, which is based on

total compensation as well as the length of service with the company. In 2013 expenses of

€ 181,476 were recognized for additions to the provision for severance compensation (2012:

€ 399,334). Payments of € 836,318 were made to former members of the Managing Board and

their surviving dependents during the reporting year (2012: € 815,800).

The employment contracts with the members of the Managing Board include change of

control clauses, which regulate payment obligations in the event a board member is terminated

prematurely following a change in the control of the company. The articles of association of

Wienerberger AG define a change of control as an increase in a shareholding to over 20% that

triggers a mandatory takeover offer to all other shareholders. The change of control clauses limit

the total payments in such cases to a maximum of three years’ remuneration, depending on the

remaining term of the employment contract.

Wienerberger has concluded directors and officers insurance with coverage of

€ 100 million for the members of the Managing Board, operational bodies, control bodies and

key employees. This policy also covers damages to the company that arise from the failure of

these parties to act conscientiously (without any intentional or conscious violation of their

responsibilities). There is no deductible for the insured corporate bodies and employees of the

Wienerberger Group.

Defined contribution pension plans for the Managing Board

Severance compensation for Managing Board reflects legal regulations in Austria

Payments limited for premature termination of board contracts following a change of control

Conclusion of D&O insurance with coverage of € 100 million

Wienerberger AG

Annual Report 2013


67

The members of the Managing Board require the approval of the Supervisory Board before

they may enter into any activities outside the scope of their work with Wienerberger. This

guarantees that neither the time required nor the related compensation could lead to a conflict

with their duties for the company. All outside activities that involve seats on supervisory boards

or comparable positions for publicly traded companies are listed on page 59 and also disclosed

on the Wienerberger website. No compensation is provided for positions in Group companies.

Supervisory Board Remuneration The remuneration system for the Supervisory Board was approved in 2011 by the 142nd

Annual General Meeting: Until further notice, each elected member of the Supervisory Board

will receive annual fixed remuneration of € 15,000. The fixed remuneration for the vice-

chairmen and chairwoman equals € 22,500 and € 30,000, respectively. For work on a committee,

the annual fixed remuneration equals € 7,500 for an ordinary member, € 11,250 for the vice-

chairmen and € 15,000 for the chairman. The fixed remuneration is limited to one committee

membership per person and is paid only once, even if a Supervisory Board member is active on

several committees. Each elected member of the Supervisory Board also receives an attendance

fee of € 5,000 per meeting day, or € 2,500 for a committee meeting that is not held on the same

day as a Supervisory Board meeting. This fee is only paid for meetings actually attended. The

fixed remuneration is adjusted on the basis of the Statistik Austria consumer price index for

2005 or a subsequent index. Increases and decreases up to and including 5% will not be

compensated, but an adjustment will be made for the full change if this corridor is exceeded.

The Supervisory Board received remuneration of € 429,021 for 2013, which will be

distributed in 2014 (2012: € 451,887). The year-on-year decline of 5% is attributable, above all,

to the reduction in the size of the Supervisory Board to five shareholder representatives. This

remuneration is distributed as shown in the following table:

Supervisory Board Remuneration in € 2012 2013

Regina Prehofer, Chairwoman 1) 47,500 60,000

Friedrich Kadrnoska, Chairman 2) 52,500 75,000

Christian Dumolin, Vice-Chairman 3) 61,250 24,890

Karl Fink, Vice-Chairman 52,500 56,250

Peter Johnson, Vice-Chairman 4) 45,000 67,120

Harald Nograsek 62,500 60,000

Claus J. Raidl 3) 50,000 20,760

Wilhelm Rasinger 62,500 65,000

Franz Rauch 5) 18,137 -

Total 451,887 429,021

1) Chairwoman of the Supervisory Board since December 10, 2013 2) Died on December 9, 2013 3) Member of the Supervisory Board up to May 14, 2013 4) Vice-Chairman of the Supervisory Board since May 14, 2013 5) Member of the Supervisory Board up to May 11, 2012

Other activities require Supervisory Board approval

Supervisory Board remuneration system remains unchanged since 2011

68

No compensation is paid for services outside the above-mentioned Supervisory Board

duties, in particular for consulting or arranging services. The salaries received by the employee

representatives as part of their employment contracts represent exceptions to this rule. No

pension commitments were made to the members of the Wienerberger Supervisory Board.

Shareholdings The members of the Managing and Supervisory Boards have voluntarily agreed to disclose

their holdings in shares of Wienerberger AG. In accordance with § 48 of the Austrian Stock

Exchange Act, the purchase or sale of shares by the members of these boards is reported to the

Austrian Financial Market Authority and also disclosed on the Wienerberger website

(see “Directors’ Dealings”). In 2013 none of the Supervisory Board or Managing Board members

purchased or sold Wienerberger shares. The number of Wienerberger shares held by the

members of the Managing and Supervisory Boards totaled 165,118 at the end of 2013.

Number of shares owned 1.1.2013 Purchase Sale 31.12.2013

Managing Board Heimo Scheuch 101,252 0 0 101,252

Willy Van Riet 22,142 0 0 22,142

Supervisory Board Regina Prehofer 0 0 0 0

Karl Fink 0 0 0 0

Peter Johnson 0 0 0 0

Harald Nograsek 1,400 0 0 1,400

Wilhelm Rasinger 40,324 0 0 40,324

Total 165,118 0 0 165,118

No pension commitments or additional compensation for Supervisory Board

Managing and Supervisory Boards voluntarily disclose holdings in Wienerberger shares

Wienerberger AG

Annual Report 2013


Report of the Supervisory Board

69

The Supervisory Board and Managing Board held seven meetings during the reporting year,

which focused on the strategic development and the financial position of the Wienerberger

Group as well as major events, investments and other measures. In addition to its advisory

functions, the activities of the Supervisory Board focused, above all, on monitoring the legality,

propriety and appropriateness of management. The Managing Board provided the Supervisory

Board with detailed information at all meetings, and also supplied regular written reports on the

business and financial condition of the Group and its holdings as well as the personnel situation

and planned acquisitions and investments. Friedrich Kadrnoska and I as well as the chairmen of

the committees met regularly with the CEO to discuss Wienerberger’s strategy, business

development and risk management. The committees examined a range of specialized subjects in

detail and reported to the Supervisory Board on the results of these discussions. The responsibili-

ties of the individual committees are described in the chapter “Corporate Governance at

Wienerberger” on page 56, and the members of the committees are listed on page 58. The

Personnel and Nominating Committee, which also serves as a Remuneration Committee, met

three times in 2013 and the Audit Committee met five times. Strategic issues were regularly

discussed at the Supervisory Board meetings and also examined in detail by the Strategy

Committee, which met four times. The Presidium, which decides in all matters involving the

relationship between the Company and the members of the Managing Board, unless the full

Supervisory Board or Personnel and Nominating Committee is responsible, received regular

information from the Managing Board on the development of business. Since all relevant

Supervisory Board decisions were taken in the plenary sessions, the Presidium did not meet

during the reporting year. No member of the Supervisory Board was absent from more than half

of the meetings; one Supervisory Board member who is active on several committees did not

attend three committee meetings, and two committee members were each excused from one

meeting. All members of the Audit Committee were present at all five meetings.

The Audit Committee consulted the auditor in its meetings on February 21 and March 20,

2013, which covered the examination of the consolidated financial statements for 2012, the

annual financial statements of Wienerberger AG, the management reports for the company and

the Group, the corporate governance report and the recommendation of the Managing Board for

the distribution of profit. In order to provide the capital market with timely information, audited

results for the 2012 financial year were published in the form of a short report on February 26,

2013. The full annual report was released on March 29, 2013. On March 20, 2013 the Audit

Committee discussed a report by the auditor on the status of risk management at Wienerberger.

This report concluded that the Group’s active risk management system permits the effective

identification, evaluation and monitoring of risk factors as well as fast reaction to these risks. A

statement was also received from the auditor that covered the legal relations of the audit firm

with the Wienerberger Group and the members of its corporate bodies for 2013. Based on a

tender, a recommendation was made to the Supervisory Board on March 28, 2013 for the

election of the auditor. Regular subjects dealt with by the Audit Committee included reports on

the scheduled work by internal audit, the results of these audits and further steps taken during

follow-up audits.


Extensive coordination between Supervisory and Managing Boards

Audit Committee examines annual financial statements, risk management and internal audit

70

The members of the Supervisory Board reconfirmed their independence in accordance with

the Austrian Corporate Governance Code at the meeting on February 25, 2013. Christian

Dumolin, who ceased to meet the independence criteria on July 17, 2011 because of his mem-

bership on the Supervisory Board for over 15 years, did not stand for re-election at the 144th

Annual General Meeting (AGM) and left the Supervisory Board on May 14, 2013. The inde-

pendence criteria defined by the Supervisory Board are summarized on page 57 and disclosed in

detail on the Wienerberger website. Discussions at several meetings of the Supervisory Board,

among others as part of the annual self-evaluation, also focused on the efficiency of its working

procedures, cooperation between the Supervisory Board and its committees, succession planning

for this corporate body and opportunities for optimization.

Following the reduction in the Managing Board from three to two members at the end of

2012, the terms of office for Heimo Scheuch and Willy Van Riet were extended prematurely to

April 1, 2018 based on the Group’s very successful new orientation. The new employment con-

tracts and remuneration system for the Managing Board were designed by the Presidium and

Personnel and Nominating Committee with the support of external consultants. In particular, the

total remuneration for the Managing Board was developed and determined together. Detailed

information on the criteria for variable remuneration, the underlying principles for pensions and

claims at the end of employment is provided in the Remuneration Report (see pages 64 to 68).

Christian Dumolin and Claus J. Raidl did not stand for re-election at the 144th AGM

following the end of their terms on the Supervisory Board. The number of shareholder

representatives on the Supervisory Board therefore declined from eight to six. At the Supervisory

Board meeting following the 144th AGM on May 14, 2013, Friedrich Kadrnoska was confirmed

as chairman and Karl Fink as vice-chairman. Peter Johnson followed Christian Dumolin as a

further vice-chairman and, in accordance with the rules of procedure for the Supervisory Board,

also joined the Presidium. In connection with new appointments to the Supervisory Board

committees, I became a member of the Strategy and Audit Committees and was replaced by

Peter Johnson on the Personnel and Nominating Committee. At that same meeting the

Supervisory Board followed the AGM authorization and, in accordance with § 270 (1) of the

Austrian Commercial Code, formally engaged KPMG Wirtschaftsprüfungs- und Steuerberatungs

AG to audit the financial statements for 2013.

The Supervisory Board meeting on October 23, 2013 took place during a two-day visit to

Belgium. This trip gave the Supervisory Board an opportunity for intensive discussions with local

management on operating and strategic issues in the Belgian country organization as well as tours

of the facing brick plant in Beerse, the clay block plant in Rumst and the showroom in

Londerzeel.

Confirmation of independence by Supervisory Board members

Change in remuneration system and extension of contracts for Managing Board

Christian Dumolin and Claus Raidl leave Supervisory Board

Supervisory Board visits Belgian country organization in the Clay Building Materials Europe Division

Wienerberger AG

Annual Report 2013



71

Regina Prehofer, Chairwoman of the Supervisory Board of Wienerberger AG

The Supervisory Board was informed of the death of our chairman, Friedrich Kadrnoska, at

the meeting on December 10, 2013. We will always honor the memory of our longstanding

chairman who died unexpectedly on December 9, 2013 at the age of 62 after a brief, severe

illness. Friedrich Kadrnoska chaired the Supervisory Board following his election in May 2002

and, in his monitoring and advising functions, provided the Managing Board with outstanding

support for the benefit of the Wienerberger Group. During his time in office, Friedrich

Kadrnoska played a decisive role in the strategic orientation and internationalization of the

Wienerberger Group.

Wienerberger has integrated a long-term succession management process at all levels of the

corporation. The Supervisory Board was therefore able to react to this sad event on a timely basis

and elected me, a member of this body since 2011, unanimously as its chairwoman. With this

decision, the Supervisory Board underscores its approval of the Group’s support for women in

management positions. Following my election as chairwoman, I resigned, as planned, from the

Audit Committee and joined the Personnel and Nominating Committee.

The annual financial statements and the management report of Wienerberger AG as

well as the IFRS consolidated financial statements for 2013 were audited by KPMG

Wirtschaftsprüfungs- und Steuerberatungs AG; this audit did not give rise to any objections. The

Audit Committee discussed the documentation for the annual financial statements, the

recommendation of the Managing Board for the distribution of profit and the auditor’s reports in

detail with the auditor and presented this information to the Supervisory Board. The Supervisory

Board examined this information as required by § 96 of the Austrian Stock Corporation Act and

agreed with the results of the audit. The Supervisory Board approved the annual financial

statements, ratifying them in accordance with § 96 (4) of the Austrian Stock Corporation Act,

and, after an analysis of the company’s financial position, agreed with the recommendation of

the Managing Board for the use of profit.

Tribute

Regina Prehofer elected chairwoman of Supervisory Board

Auditor’s report on annual financial statements for 2013

72

The Supervisory Board would like to express its thanks to the Managing Board,

management and all employees of the Wienerberger Group for their outstanding performance in

2013. Wienerberger has a strong and diversified industrial base, a healthy capital structure as well

as innovative products and system solutions for energy-efficient and sustainable construction and

the infrastructure of the future. With its motivated and success-oriented employees and

experienced management, Wienerberger is well positioned to play an active role in a future

economic recovery.

At the end of my report, I would like to express my thanks for the trust placed in me. I look

forward to continuing my extremely constructive and results-oriented cooperation with my

colleagues on the Supervisory Board and with the Managing Board of Wienerberger AG.

Vienna, March 27, 2014

Regina Prehofer, Chairwoman

Thanks to employees and management

Wienerberger AG

Annual Report 2013

Corporate Governance Report Report of the Supervisory Board

Management Report The Economy and Capital Markets

73

Developments on the capital markets in 2013 were fuelled by the end of the recession in

Europe, an improved outlook for medium-term growth in the western industrial countries and a

diminishing probability that risk scenarios will actually materialize in Europe. As a result, most of

the leading indexes in the financial capitals of Europe and the USA closed the year on a sound

upturn.

The USA recorded the strongest growth among the western industrial states with a plus of

1.9% in 2013. Although momentum was slower than the previous year (+2.8%), the annualized

growth rates in the third quarter (+4.1%) and fourth quarter (+3.2%) were encouraging and led,

among others, to a decline in the unemployment rate to 6.7% at year-end, the lowest level since

October 2008. The budget sequestration with nearly USD 42 billion of automatic budget cuts

for the 2013 fiscal year and the conflict over the debt ceiling, which led to a 16-day government

shutdown in October, only slowed growth temporarily and did not result in a further lasting

decline. The new budget act was finally passed by both houses of Congress and signed by

President Obama at the end of December 2013. The search for a successor to Federal Reserve

chairman Ben Bernanke, who announced his intention to resign at the end of his term on

January 31, 2014, and uncertainty over the effects on future monetary policies preoccupied the

financial markets during the second half of the year. Increasing signs that the Federal Reserve was

planning to end its extremely expansive monetary policy also began to appear at mid-year. The

start of tapering, i.e. the gradual reduction in monthly purchases of government bonds and

securitized mortgage loans, was announced in December 2013, together with plans to hold key

interest rates at an extremely low level for the time being. A more optimistic outlook for

economic growth in the USA as well as the end of the ultra-loose monetary policy and the

increasing willingness of investors to take on risk was reflected in an increase in yields on

government bonds starting in May 2013.

Developments in Europe during 2013 were influenced by the end of recession in the euro

zone. The first quarter decline of 0.2% in real economic growth was followed by an increase of

0.3% in the second quarter, which marked the end of the six-quarter recession. Expectations of

continuing and slightly stronger growth as well as further progress on structural reforms reduced

the fears that risk scenarios, such as the exit of individual member states from the euro zone,

would actually materialize. Growing confidence in the stability of the euro zone was reflected,

above all, in lower risk premiums for government bonds in the peripheral countries. The

sustainability of the recovery and the success of fiscal and structural measures were underscored

by the announcement of plans by Ireland and Spain to leave the European Stability Mechanism.

However, there is still no end in sight to the euro zone’s expansive financial and monetary policy.

The European Central Bank (ECB) reacted to the declining inflation rates, and surprised the

markets, by cutting the key interest rate to a new record low in November 2013. ECB president

Mario Draghi used the occasion to reinforce the ECB’s intention and maneuvering room to take

further steps if necessary. Great Britain, the largest European economy outside the euro zone,

significantly outpaced the core euro states with growth of 1.7%. This development was

supported by a strong service sector and easier access to credit financing for private households

and small and medium-sized companies.

Source: IMF, ECB

MANAGEMENT REPORT

The Economy and Capital Markets

Markets fuelled by growing optimism over economic recovery

Continued improvement in USA despite fiscal cutbacks and end of extremely expansive monetary policy

End of recession in euro zone

74

In the USA, the Dow Jones Industrial Average closed the year with an increase of 26.5%

and a new all-time high of 16,576.7 points at year-end. The broader S&P 500 (+29.6%) and the

NASDAQ Composite (+38.3%) also reported growth for the year and new annual highs of

1,848.4 points (S&P 500) and 4,176.6 points (NASDAQ Composite) at the end of December. In

Europe, the German DAX reflected the solid macroeconomic fundamentals in that country and

recorded the strongest performance among the leading European indexes with an increase of

25.5%. The DAX rose to a new high of 9,589.4 points in December 2013 before ending the year

at 9,552.2 points. The British FTSE 100 (+14.4%) and the French CAC40 (+18.0%) produced

double-digit increases in 2013, while the Austrian ATX rose by only 6.1% to 2,546.5 points. This

more modest growth resulted primarily from the weak development of heavily weighted

companies in the banking and insurance, telecommunications and utility sectors. The leading

Asian indexes showed a mixed picture: the Shanghai Composite Index (-6.7%) and the Hang

Seng (+2.9%) were negatively influenced by the slower economic growth in China, but the

NIKKEI 225 was pushed by extensive measures to stimulate the Japanese economy and rose by

56.7% to 16,291.3 points.

Residential construction in Europe weakened further in 2013 and remained below

expectations at the beginning of the year. Consumer confidence in the euro zone exceeded the

long-term average at year-end for the first time since July 2011, but construction activity was

still negatively influenced by the generally weak economy and restrictive lending by banks.

Construction was also slowed by the long, snowy winter during the first four months and flood-

ing in Central Europe during the early summer, and the catch-up effects therefore failed to

materialize. The comparatively mild start into the winter 2013/14 was only able to partly offset

the weakness at the beginning of the year. Euroconstruct forecasted a slight 0.3% increase in

residential construction output on Wienerberger’s relevant markets in its December 2012 report,

but reduced this estimate to a decline of 0.8% at year-end. Construction output fell by only

0.5% in Western Europe, but by 9.4% in the four East European countries under monitoring

(Poland, Slovakia, Czech Republic and Hungary). Among Wienerberger’s most important West

European markets, the Netherlands, France and Italy were particularly hard hit in 2013. New

residential construction output was 1.2% lower than the previous year, with a more substantial

drop of 12.6% in Eastern Europe. The less cyclical renovation market was also unable to match

the prior year’s performance and recorded a slight decline of 0.5%. Following in part significant

declines from an already weak level, construction on a number of markets fell below the crisis

year 2009 in 2013. For 2014, Euroconstruct is projecting a trend reversal with growth of 1.9% in

residential construction output on Wienerberger’s relevant markets.

The number of housing starts for single- and two-family houses per thousand residents is an

important indicator of construction activity in the end markets for the Clay Building Materials

Europe Division. In 2013 positive development was recorded only in Germany, Great Britain,

Bulgaria and Slovenia. With declines ranging from 9.1% to 18.2%, these statistics also underscore

the sharp drop in construction on Wienerberger’s key markets in France, Belgium, Poland and the

Netherlands. The weighted average fell by 2.6% in Western Europe and by 7.6% in Eastern

Europe.

Sound gains for key indexes in 2013

Further decline for residential construction in Europe during 2013

Housing starts per 1,000 residents fall by 2.6% in Western Europe and 7.6% in Eastern Europe


Management Report The Economy and Capital Markets

75

The pressure on public sector authorities to cut spending was also reflected in a decline in

infrastructure investments during 2013. Construction output in the markets where the

Wienerberger Group is present fell by 3.3% in 2012 and by a comparatively more moderate

0.9% in 2013, but was still substantially stronger than engineering activity in total Europe with a

year-on-year minus of 4.0%. Wienerberger’s relevant markets in Western Europe recorded a

slight 0.4% rise in the new construction segment and modest growth of in aggregate 0.5% in the

renovation segment in Western and Eastern Europe. In contrast, new construction in Eastern

Europe contracted sharply with a drop of 17.7%. Euroconstruct is forecasting an increase of

2.4% in infrastructure investments on our relevant markets in 2014. The waterworks subsegment,

which represents nearly 10% of infrastructure spending, fell by 3.3% in our markets during 2013.

This area also includes fresh water and wastewater systems, which are an important market for

our pipe business. The decline is attributable to Western Europe, where construction output

dropped by 4.2%. A further decline of 1.4% in waterworks construction is projected for 2014.

Construction in the telecommunication segment was stable in 2013 with a plus of 0.1%, while

the energy segment recorded an increase of 2.0%. Both areas are expected to generate growth in

2014, with a plus of 1.3% for telecommunications and 4.8% for energy. Non-residential

construction output fell by 2.2% in our relevant markets during 2013 after a decline of 2.5% in

the previous year. However, stabilization is expected in 2014 with a slight increase of 0.4%.

Infrastructure spending also lower in 2013

76

The reporting year brought continued recovery on the US housing market. According to the

U.S. Census Bureau, housing completions rose by 17.4% to 762,200 units and housing starts by

18.3% to 923,400 units. Building permits totaled 974,700 (+17.5%) and, for the first time in

years, the growth rates for housing starts in the single-family segment were higher than the

multi-family segment. The National Association of Home Builders (NAHB) expects an increase

in housing starts to 1.15 million in 2014, whereby this forecast is slightly higher than the market

consensus based on estimates by banks and other market research institutes. The NAHB/Wells

Fargo Housing Market Index, which measures current estimates of house sales by builders and

developers as well as their expectations for the next six months, continued to rise and reached an

index value of 57 in December 2013. The index has held steady above 50 since June 2013,

which indicates that more market participants see the outlook as positive than negative. The

increase in yields on US government bonds was accompanied by an increase in the fixed interest

rates for 30-year mortgage loans from 3.4% in December 2012 to roughly 4.5% in December

2013 (Freddie Mac Primary Mortgage Market Survey). This development has a substantial

negative impact not only on the demand for mortgage loans and house purchases, but also on the

refinancing market. However, the Mortgage Bankers Association is projecting a further increase

in the volume of mortgage loans for house purchases during 2014 in spite of the subdued

expectations. Selling prices rose by 13.4% year-on-year in the 12 months up to and including

December 2013, according to the S&P/Case-Shiller 20-City Composite Home Price Index. In

total, the large number of positive indicators on the US housing market points to a continuation

of the upward trend in 2014.

US housing market emerges from crisis with strong growth in housing starts


Management Report The Economy and Capital MarketsFinancial Review

77

Earnings The development of the Wienerberger Group in 2013 was influenced by a weather-related

slow start into the construction season and an ongoing difficult market environment in Europe.

Sound results were recorded in North America and Great Britain, above all in the second half-

year when steady recovery in the construction industry drove volume growth, and on the market

in Russia. Pipelife also met its targets with stable revenues, in spite of headwinds in many regions.

A strong final quarter in the European brick business was unable to fully offset the weak start

into the year, but made a contribution to the better-than-expected improvement in Group

earnings.

Group revenues rose by 13% year-on-year to € 2,662.9 million, whereby the increase is

attributable to the initial inclusion of Pipelife for the full financial year. After an adjustment for

acquisitions and foreign exchange effects, organic revenues matched the prior year. Prices were

roughly constant at the prior year level for the Wienerberger Group as a whole, but volumes

were slightly lower. The strong euro had a negative effect of € 35.8 million on revenues, whereby

the largest negative foreign exchange effects resulted from the British pound, the US dollar, the

Norwegian krone and the Russian ruble.

The Clay Building Materials Europe Division generated external revenues of

€ 1,402.4 million, or 3% less than the previous year. The ongoing difficult market environment

and severe weather in the first quarter also had a significant negative impact on the European

construction industry in 2013, with individual markets falling below the crisis year 2009.

Operating EBITDA in this division fell by 7% year-on-year to € 171.3 million. The decline

resulted in part from the costs for extended plant standstills, which were not fully offset by

savings from the restructuring programs implemented in 2012.

External revenues in the Pipes & Pavers Europe Division rose from € 711.2 million to

€ 1,029.5 million. This growth was based primarily on the contribution made by the Pipelife

Group, which was fully consolidated as of May 31, 2012. Wienerberger’s concrete paver business,

which operates exclusively in Eastern Europe, registered sound earnings improvement in a

difficult market environment due to the implementation of strict cost savings measures. While

Steinzeug-Keramo recorded stable revenues in 2013, operating results were burdened by

non-recurring costs.

The North America Division saw a substantial improvement in construction activity during

2013, with Wienerberger also benefiting from this development. External revenues in North

America increased 16% to € 224.7 million and operating EBITDA rose by 35% to € 13.2 million.

Financial Review

Declining earnings in the Clay Building Materials Europe Division

Pipelife and Semmelrock with sound earnings growth in the Pipes & Pavers Europe Division

Accelerating recovery in North America

78

Earnings Development 2012 Disposals 1) Purchases 1) F/X 2) Organic 2013

in € mill. in € mill. in € mill. in € mill. in € mill. in € mill.

Revenues 2,355.5 0.0 347.7 -35.8 -4.5 2,662.9

Cost of goods sold -1,661.0 0.0 -267.1 26.1 14.6 -1,887.4

Selling expenses -486.6 0.0 -43.5 6.2 1.1 -522.9

Administrative expenses -144.9 0.0 -15.8 1.6 -2.2 -161.4

Other operating expenses and income -32.0 0.0 -4.4 0.4 -0.1 -36.1

Operating EBITDA 245.5 0.0 31.1 -4.3 -5.8 266.5

Operating EBIT 31.0 0.0 16.9 -1.5 8.8 55.3

Non-recurring items 3) -52.8 0.0 0.0 0.0 62.2 9.4

Financial results 4) -14.5 0.0 -3.4 0.3 -50.2 -67.8

Profit/loss before tax -36.2 0.0 13.5 -1.1 20.7 -3.1

Profit/loss after tax -40.5 0.0 10.9 -1.0 22.8 -7.8

1) Effects from changes in the consolidation range 2) Foreign exchange effects 3) Restructuring costs, impairment charges to property, plant and equipment as well as goodwill, and income from the reversal of a

provision for an impending antitrust penalty 4) Including income from investments in associates

Operating EBITDA rose by 9% year-on-year to € 266.5 million in 2013. Negative foreign

exchange differences of € 4.3 million from the Russian ruble, Norwegian krone and British

pound were contrasted by a further € 31.1 million in consolidation effects from Pipelife’s

earnings contribution in the first five months. After an adjustment for foreign exchange effects,

the organic change in operating EBITDA for the Wienerberger Group amounted to a

decline of 4%.

Operating EBITDA 2012 2013 Chg.

in € mill. in € mill. in %

Clay Building Materials Europe 183.5 171.3 -7

Pipes & Pavers Europe 67.4 100.3 +49

North America 9.8 13.2 +35

Holding & Others -15.2 -18.2 -21

Wienerberger Group 245.5 266.5 +9

Energy costs fell by € 6.4 million to equal 10% of revenues in 2013 (2012: 12%). The

comparatively higher decline in energy costs as a share of revenues resulted from the decrease in

production volumes and from the initial consolidation of Pipelife. In contrast to the ceramic

products business, energy consumption represents a smaller component of expenses in the

production of plastic pipes.

Operating EBITDA 9% higher than prior year at € 266.5 million

Energy costs fall by € 6.4 million

Wienerberger AG

Annual Report 2013

Management Report Financial Review

79

Depreciation and amortization of € 211.2 million (2012: € 238.5 million) include

scheduled depreciation and amortization as well as impairment charges of € 13.3 million (2012:

€ 19.9 million). These impairment charges are related primarily to mothballed or deactivated

facilities as well as the shutdown of production capacity. An impairment charge is recognized

when the carrying amount of the respective asset exceeds the recoverable amount. In 2013 no

impairment charges were recognized in connection with restructuring (2012: € 14.2 million) or

goodwill (2012: € 9.8 million). The depreciation ratio declined from 8.3% in 2012 to 7.4% for

the reporting year. This value, which is relatively high in international comparison, reflects the

strong pace of investment activity in prior years and is an indicator of the capital-intensive nature

of the business and the technical potential of the Wienerberger Group.

Profitability Ratios 2012 2013

in % in %

Gross profit to revenues 29.5 29.1

Administrative expenses to revenues 6.2 6.1

Selling expenses to revenues 20.7 19.6

Operating EBITDA margin 10.4 10.0

Operating EBIT margin 1.3 2.1

The operating EBITDA margin declined slightly from 10.4% in 2012 to 10.0% in 2013. This

change is explained by the different cost structure in the plastic pipe business, which had a

stronger effect than in 2012 due to the inclusion of Pipelife for the full reporting year. In contrast,

the CFROI for Pipelife is substantially higher than the internal hurdle rate of 11.5% because the

plastic pipe business is less capital intensive than the brick business.

Operating EBIT rose to € 55.3 million for the reporting year (2012: € 31.0 million). The

remaining provision for the impending antitrust penalty in Germany was released to profit or

loss following the termination of legal proceedings and resulted in income of € 9.4 million. After

an adjustment for non-recurring effects, Wienerberger generated EBIT of € 64.7 million (2012:

€ -21.7 million).

Income from investments in associates and joint ventures fell from € 4.5 million in the

previous year to € -2.6 million. This decline is explained by the loss recorded by Tondach

Gleinstätten AG and the effect from the initial consolidation of the Pipelife Group, whose results

for the first five months of 2012 were included under this position. The interest result reflects

the higher financing costs resulting from the issue of a bond in April 2013 and therefore

deteriorated from € -50.7 million in the prior year to € -56.0 million in 2013. Other financial

results amounted to € -9.2 million, whereby the prior year value of € 31.7 million includes a

positive special effect of € 42.3 million from the valuation of the previously held 50% stake in

Pipelife in connection with the initial consolidation. Profit before tax improved substantially

from € -36.2 million in the previous year to € -3.1 million in 2013.

Depreciation and amortization include € 13.3 million of impairment charges

Operating EBITDA margin declines from 10.4% to 10.0%

Operating EBIT rises from € 31.0 million in 2012 to € 55.3 million in 2013

Strong improvement in profit before tax from € -36.2 million in 2012 to € -3.1 million

80

Income Statement 2012 2013 Chg.


Revenues 2,355.5 2,662.9 +13

Cost of goods sold -1,661.0 -1,887.4 +14

Selling and administrative expenses 1) -631.5 -684.2 +8

Other operating expenses -83.8 -79.5 -5

Other operating income 51.8 43.5 -16

Operating EBIT 31.0 55.3 +78

Restructuring costs and impairment charges to property, plant and equipment -43.0 0.0 -100

Impairment charges to goodwill -9.8 0.0 -100

Release of a provision for an impending antitrust penalty 0.0 9.4 >100

EBIT -21.7 64.7 >100

Financial results 2) -14.5 -67.8 <-100

Profit/loss before tax -36.2 -3.1 +91

Income taxes -4.3 -4.8 +9

Profit/loss after tax -40.5 -7.8 +81

1) Including freight costs 2) Including income from investments in associates

Income tax expense rose slightly to € 4.8 million (2012: € 4.3 million) due to the lower

pre-tax loss recorded for the reporting year. This reflects the regional shift of earnings to West

European countries with higher nominal tax rates, an effect that was increased by the initial

consolidation of the Pipelife Group for the full financial year and the non-deductibility of tax

loss carryforwards in individual countries of the ceramic business.

The after-tax loss recorded by the Wienerberger Group was reduced from € -40.5 million in

2012 to € -7.8 million for the reporting year. Earnings per share are computed after the

deduction of non-controlling interests and the € 32.5 million hybrid coupon payment. Based on

a weighted average of 115.1 million shares outstanding (2012: 115.1 million shares), earnings per

share improved to € -0.34 (2012: € -0.61).

Asset and Financial Position The balance sheet total rose by 2% year-on-year to € 4,211.4 million in 2013. This increase

resulted primarily from the issue of a € 300.0 million bond in April 2013 and the related rise in

liquid funds, which were reserved to refinance the bond that is scheduled to mature in July 2014.

The balance sheet structure of the Wienerberger Group is typical for the industry, and is

characterized by a high fixed asset component and long-term financing.

Non-current assets were lower than the previous year at 62% of total assets (2012: 68%),

whereby property, plant and equipment represented 60% (2012: 62%) of capital employed at

year-end. The successful continuation of strict working capital management during the reporting

year led to a reduction in inventories from € 700.9 million in 2012 to € 666.0 million. Average

days sales outstanding rose from 26 to 34 days due to the longer payment terms prevailing in the

plastic pipe business, while days payables outstanding decreased from 44 to 41 days. Working

Income taxes slightly higher than prior year

Earnings per share equal € -0.34

Balance sheet total of € 4,211.4 million

Working capital to revenues reflects target with year-end level of approx. 20%



81

capital (inventories + net trade receivables - trade payables) was reduced to € 541.9 million in

2013 (2012: € 589.9 million). This represents roughly 20% (2012: 25%) of revenues and reflects

our target. The average working capital conversion period rose to 98 days (2012: 93 days). At

year-end 2013 Wienerberger had cash and cash equivalents, securities and other financial assets

totaling € 588.1 million (2012: € 314.8 million). In accordance with our proactive financing

strategy, these strong liquidity reserves will be used to repay a bond that is scheduled to mature

in July 2014 and to finance the seasonal build-up of working capital.

Group equity declined by 5% to € 2,254.2 million (2012: € 2,363.7 million). Equity was

reduced by the € 32.5 million hybrid coupon payment and the € 13.8 million dividend payment

as well as negative foreign exchange differences of € 71.2 million, primarily from the US dollar,

Russian ruble and Norwegian krone. The after-tax loss reduced equity by € 7.8 million, but

actuarial gains of € 5.5 million were recognized under other comprehensive income in

connection with defined benefit pension plans and provisions for severance compensation.

Deferred taxes declined slightly year-on-year to € 104.0 million (2012: € 105.8 million).

Employee-related provisions fell from € 132.3 million in the prior year to € 116.2 million. Since

Wienerberger has not granted any new defined benefit pension commitments and is converting

existing commitments into defined contribution plans wherever possible, the provisions for

pensions will continue to decrease independent of any changes in parameters. Current provisions

decreased to € 57.4 million (2012: € 80.6 million) following the implementation of restructuring

measures announced or started in 2012 and the release of a provision for an impending antitrust

penalty in 2013. Non-current and current provisions represented 5% (2012: 6%) of the balance

sheet total at year-end. Interest-bearing loans (financial liabilities) rose by € 210.2 million to

€ 1,127.0 million following the issue of a bond in April 2013 and include € 1,116.8 million

due to banks, bondholders and other parties, € 10.0 million of derivatives with negative market

values and € 0.2 million of Group liabilities. These liabilities are contrasted by cash,

bank deposits and securities of € 588.1 million. Of the € 1,126.8 million in interest-bearing

Group equity equals € 2,254.2 million

Release of provision for impending antitrust penalty after termination of proceedings

82

liabilities (excluding Group liabilities), 74% (2012: 94%) are long-term and 26% (2012: 6%)

short-term in nature.

Calculation of Net Debt 1) 2012 2013 Chg.


Long-term interest-bearing financial liabilities 858.7 836.1 -3

Short-term interest-bearing financial liabilities 57.7 290.7 >100

Financial leases 0.2 0.0 -93

- Intercompany receivables and payables from financing -22.2 -27.6 +24

- Securities and other financial assets -50.1 -63.7 +27

- Cash and cash at bank -242.3 -496.7 >100

Net debt 602.0 538.9 -10

1) Excluding the hybrid bond, which is reported under equity in accordance with IFRS

Net debt was reduced by 10% during the reporting year to € 538.9 million as of

December 31, 2013. This decline resulted primarily from an increase in gross cash flow to

€ 164.6 million, a € 26.2 million reduction in working capital and proceeds of € 19.9 million

from the disposal of non-current assets (mainly non-core real estate). These items were

contrasted by investments totaling € 106.7 million, the € 32.5 million hybrid coupon payment

and the € 13.8 million dividend. Gearing equaled 23.9% at the end of the reporting year (2012:

25.5%). Long-term financing such as equity, non-current provisions and long-term liabilities

covered 129% of fixed and financial assets at year-end 2013 (2012: 126%). The ratio of net debt

to operating EBITDA equaled 2.0 as of December 31, 2013 (2012: 2.2), and the EBITDA

interest coverage ratio was 4.8 (2012: 5.0).

Net debt falls to € 538.9 million at year-end from € 602.0 million in prior year

Wienerberger AG

Annual Report 2013


83

Balance Sheet Development 2012 Disposals 1) Purchases 1) F/X 2) Organic 2013

in € mill. in € mill. in € mill. in € mill. in € mill. in € mill.

Fixed assets 1,803.1 0.0 0.2 -42.3 -97.7 1,663.3

Intangible assets and goodwill 882.1 0.0 -3.1 -20.9 -15.2 842.9

Other non-current assets 155.1 0.4 0.1 -4.6 6.1 156.3

Inventories 700.9 0.0 0.0 -13.6 -21.3 666.0

Other current assets 598.5 -0.4 0.1 -7.0 290.8 882.8

Balance sheet total 4,139.7 0.0 -2.7 -88.4 162.7 4,211.4

Equity 3) 2,363.7 0.0 0.0 -71.2 -38.3 2,254.2

Provisions 265.9 0.0 0.0 -3.6 -37.8 224.5

Liabilities 1,510.1 0.0 -2.7 -13.6 238.9 1,732.7

1) Effects from changes in the consolidation range 2) Foreign exchange effects 3) Including non-controlling interests and hybrid capital

The organic increase in the balance sheet total resulted primarily from the issue of a bond in

April 2013 and the related growth in cash and cash equivalents.

Balance Sheet Ratios 2012 2013

Capital employed in € mill. 2,931.3 2,767.6

Net debt in € mill. 602.0 538.9

Equity ratio in % 57.1 53.5

Gearing in % 25.5 23.9

Asset coverage in % 84.4 86.4

Working capital to revenues in % 25.0 20.3

84

Treasury High central bank liquidity continued to influence the financial markets in 2013, a situation

that was reflected in strong demand by investors for stocks and bonds. Wienerberger used this

market climate to issue a € 300 million bond with a seven-year term and a 4% coupon, which

was planned as refinancing for 2014. This proactive refinancing strategy with the issue of smaller

bonds will be retained in the future to optimize the term structure of liabilities.

Wienerberger will continue to hold sufficient liquidity reserves because cash preservation

and a strong capital structure remain top priority. However, the structure of the liquidity reserve

will be optimized to not only include liquid funds as reported on the balance sheet, but also the

increased use of committed credit lines in order to reduce interest expense. At year-end 2013

Wienerberger had cash and cash equivalents of € 496.7 million as well as € 350.0 million of

committed, unused credit lines to cover liquidity fluctuations. The indicators related to the

covenants defined in the bank credit agreements remain clearly within the agreed levels.

Net debt / operating EBITDA equaled 2.0 at year-end, which is far below the defined limit of

3.5 and the internal threshold of 2.5. Operating EBITDA / interest result declined from 5.0 in

the previous year to 4.8, but is still substantially over the minimum level of 3.75. In line with the

slightly less conservative refinancing policy, the interest cover is expected to improve in 2014.

Treasury Ratios 31.12.2012 31.12.2013 Threshold

Net debt / operating EBITDA 1) 2.2 2.0 <3.50

Operating EBITDA 1) / interest result 2) 5.0 4.8 >3.75

1) 2012 calculated on the basis of a pro-forma 12-month operating EBITDA 2) 2012 calculated on the basis of a pro-forma 12-month interest results

As of December 31, 2013, 89% of liabilities carried fixed interest rates. The remaining 11%

of liabilities have variable interest rates and are contrasted by variable interest deposits. This

practically eliminates the Group’s interest rate risk. The reporting year was characterized by in

part strong foreign exchange fluctuations, which were reflected primarily as translation risks on

Wienerberger’s balance sheet. Most of the financing is denominated in euros, but Wienerberger

manages the exchange rate risk connected with balance sheet items based on the net risk

position in its most important currencies (USD, CHF, GBP, PLN) and hedges part of this risk

with interest rate-currency swaps based on monthly sensitivity tests. In keeping with the

respective economic restrictions, interest rate-currency swaps are used to hedge foreign currency

financial receivables due from Wienerberger subsidiaries. As of December 31, 2013, the Group

held derivative positions in the Canadian dollar, Czech koruna, Danish krone, British pound,

Polish zloty, US dollar and Swiss franc.

Derivative reporting under the European Market Infrastructure Regulation (EMIR)

Directive started on February 12, 2014. Wienerberger is classified as a “non-financial

counterparty” below the clearing threshold because the Group does not use any speculative

instruments. Wienerberger is only subject to the reporting requirement, which is covered by the

current internal systems.

Wienerberger issues € 300 million bond

Wienerberger AG

Annual Report 2013


85

Cash Flow Gross cash flow rose by 30% year-on-year to € 164.6 million in 2013. This development

underscores Wienerberger’s ability to also generate strong cash flows in a difficult market

environment. However, cash flow from operating activities declined to € 190.9 million due to

the substantial reduction in working capital after the initial consolidation of Pipelife in 2012.

While the measures implemented as part of our active working capital management program led

to a further reduction of € 34.9 million in inventories during 2013, we are carefully monitoring

stocks to maintain unrestricted supply capability in all product segments.

Cash outflows for investments and acquisitions of € 106.7 million were substantially lower

than the prior year level of € 268.7 million, which includes the purchase of the 50% stake in

Pipelife. The reporting year also contains a short-term investment of € 11.9 million in marketable

securities, which was used to optimize cash balances. Cash flow from investing activities contains

proceeds of € 19.9 million from the sale of property, plant and equipment, whereby

€ 13.6 million resulted from Wienerberger’s program to divest non-core assets.

Wienerberger generated free cash flow (cash flow from operating activities less cash flow

from investing activities plus growth capex) of € 92.9 million in 2013, compared with

€ 163.6 million in the prior year. These funds were used for the € 32.5 million hybrid coupon,

the € 13.8 million dividend and the repayment of liabilities. Cash flow from financing activities

included the above payments as well as the proceeds from the issue of a € 300 million bond in

April 2013 and cash inflows of € 3.2 million in the form of dividends from associated companies

and joint ventures.

Cash Flow Statement 2012 2013 Chg.


Gross cash flow 127.0 164.6 +30

Change in working capital and other 102.5 26.2 -74

Cash flow from operating activities 229.5 190.9 -17

Normal capex (maintenance, rationalization, environment) -105.3 -106.0 -1

Growth capex -163.4 -0.7 +100

Divestments and other 39.4 8.0 -80

Cash flow from investing activities -229.3 -98.7 +57

Growth capex 163.4 0.7 -100

Free cash flow 163.6 92.9 -43

Gross cash flow rises by 30%

Cash outflows for investments of only € 106.7 million

Free cash flow of € 92.9 million based on higher earnings and strict working capital management

86

Investments Investments totaled € 106.7 million for the reporting year (2012: € 268.7 million) and were

generally limited to normal capex. The difference between growth capex and normal capex is

based primarily on whether an investment leads to the development of new markets or product

segments or the expansion of capacity. Maintenance, investments for technical upgrading and

production equipment for premium products are reported under normal capex. Growth capex

amounted to € 0.7 million in 2013 (2012: € 163.4 million) and involve the purchase of land for

the possible construction of a plant. Normal capex totaled € 106.0 million (2012:

€ 105.3 million) and equaled 54% of depreciation for the reporting year (2012: 54%). The

investments made in 2013 were distributed among the divisions as follows: 58% in Clay Building

Materials Europe, 33% in Pipes & Pavers Europe, 7% in North America and 2% in Holding &

Others.

1) Additions as per schedule of fixed and financial assets

Total Investments 1) 2012 2013 Chg.


Clay Building Materials Europe 65.4 61.7 -6

Pipes & Pavers Europe 183.9 34.9 -81

North America 15.3 7.3 -52

Holding & Others 4.1 2.8 -32

Wienerberger Group 268.7 106.7 -60

1) Additions to property, plant and equipment, intangible assets and financial assets, including working capital and changes in the consolidation range, or normal capex plus growth capex

Normal capex held at prior year level

Development of Non-current Assets Intangible Tangible Financial Total

in € mill. in € mill. in € mill. in € mill.

31.12.2012 882.1 1,884.4 34.3 2,800.8

Capital expenditure 1) 5.3 104.2 0.1 109.6

Changes in the consolidation range -3.1 0.2 0.0 -2.9

Depreciation and amortization -19.2 -192.0 -0.1 -211.3

Disposals -0.2 -12.2 -3.5 -15.9

Currency translation and other -22.0 -42.9 -5.4 -70.3

31.12.2013 842.9 1,741.7 25.4 2,610.0



87

Wienerberger Value Management One of the key elements for our internal strategic management is a cash-based pre-tax return,

which is calculated for all corporate levels and shows the value added by the Group and its business

units. The key ratios are cash flow return on investment (CFROI = Operating EBITDA / average

historical capital employed) and cash value added (CVA). The CFROI model allows us to compare

the various segments of the Group, independent of the age structure of their plants. Our minimum

sustainable target for CFROI, after an adjustment for non-recurring income and expenses, is 11.5%

(= hurdle rate) in all segments. For the calculation of CVA, the CFROI of the individual segments is

compared with this hurdle rate and then multiplied by average historical capital employed (CE).

CVA shows the absolute operating cash value added by the individual segments.

Calculation of Group CFROI 2012 2013

Operating EBITDA 1) in € mill. 274.1 266.5

Average capital employed in € mill. 2,984.5 2,849.5

Average accumulated depreciation in € mill. 2,281.8 2,388.0

Average historical capital employed in € mill. 5,266.3 5,237.5

CFROI 1) in % 5.2 5.1

1) Calculated on a pro-forma 12-month basis

CFROI 2013 by Divisions Operating EBITDAAverage

historical CE CFROI CVA

in € mill. in € mill. in % in € mill.

Clay Building Materials Europe 171.3 3,788.3 4.5 -264.3

Pipes & Pavers Europe 100.3 705.2 14.2 19.2

North America 13.2 683.9 1.9 -65.5

Holding & Others -18.2 60.0 -30.4 -25.2

Wienerberger Group 266.5 5,237.5 5.1 -335.8

CFROI equaled 5.1% in 2013 (2012: 5.2%) and remained substantially below the 11.5%

hurdle rate.

In addition to CFROI, return on capital employed (ROCE) is also calculated at the Group

level. This indicator is computed by comparing net operating profit after tax (NOPAT) to average

capital employed for the entire Group. The ratio indicates the extent to which Wienerberger meets

the yield required by investors. The average cost of capital for the Group is based on the minimum

return expected by investors for funds they provide in the form of equity and debt. The weighted

average cost of capital (WACC) is determined by adding an appropriate risk premium for stock

investments to the actual cost of debt for Wienerberger. The after-tax WACC equaled

6.97% in 2013.

CFROI and CVA are key indicators for management

After-tax WACC of 6.97%

88

NOPAT amounted to € 37.0 million for the reporting year (2012: € 11.6 million). ROCE

rose to 1.3% (2012: 0.4%) and resulted in EVA® of € -161.4 million (2012: € -192.2 million).

Calculation of Group ROCE 2012 2013

Operating EBIT 1) in € mill. 51.5 55.3

Income taxes 1) in € mill. -10.4 -4.8

Adjusted income taxes 1) in € mill. -29.5 -13.5

NOPAT 1) in € mill. 11.6 37.0

Equity and non-controlling interests in € mill. 2,363.7 2,254.2

Financial liabilities and financial leases in € mill. 916.6 1,126.8

Intercompany receivables and payables from financing in € mill. -22.0 -27.6

Cash and financial assets in € mill. -327.0 -585.8

Capital employed in € mill. 2,931.3 2,767.6

Average capital employed 1) in € mill. 2,984.5 2,849.5

ROCE 1) in % 0.4 1.3

Value Ratios 2012 2013

ROCE 1) in % 0.4 1.3

EVA® 1) 2) in € mill. -192.2 -161.4

CFROI 1) in % 5.2 5.1

CVA 1) in € mill. -331.8 -335.8

1) 2012 calculated on a pro-forma 12-month basis 2) EVA® is a registered brand name of Stern Stewart & Co.

ROCE of 1.3% and EVA® of € -161.4 million


Management Report Financial Review Operating Segments

89

Clay Building Materials Europe The 2013 financial year failed to bring any major changes in the difficult market environ-

ment for the construction industry. The development of new residential construction was still

influenced by ongoing uncertainty and restrictive lending by banks in a number of our European

core countries. In addition, the Clay Building Materials Europe Division was confronted with

weather-related difficulties at the beginning of the year. Construction was unable to start before

the second week in April because of the unusually long winter and was slowed by heavy rain and

flooding in parts of Europe during May and June. The second half-year brought stabilizing

demand. Mild weather in large parts of Europe during the fourth quarter had an additional

positive effect on business development, above all compared with the last quarter of 2012.

Driven by higher volumes in all product groups, revenues and operating EBITDA in the Clay

Building Materials Europe Division exceeded the weather-related lower prior year values in the

fourth quarter.

The positive development in the second half of 2013 was, however, unable to offset the

initial decline in revenues and earnings because the construction industry did not expand

capacity to handle the backlog of projects from the weather-related difficult first months of the

year. Average prices in the Clay Building Materials Europe Division roughly matched the prior

year, whereby Wienerberger was able to implement price adjustments to cover cost inflation in

Western Europe despite a market-related decline in volumes. In Eastern Europe, the weaker

demand for building materials in a number of regions led to increasing pressure on prices.

Wienerberger used its cost advantages to strengthen individual market positions through sales

promotions in these areas. Volumes in Eastern Europe therefore rose slightly in contrast to the

market trend. The Clay Building Materials Europe Division recorded a 3% year-on-year decline in

revenues to € 1,402.4 million and a 7% drop in operating EBITDA to € 171.3 million.

Clay Building Materials Europe 2012 2013 Chg. in %

Third party revenues in € mill. 1,443.8 1,402.4 -3

Operating EBITDA in € mill. 183.5 171.3 -7

Operating EBIT in € mill. 36.4 35.0 -4

Total investments in € mill. 65.4 61.7 -6

Capital employed in € mill. 1,895.2 1,776.3 -6

Ø Employees 8,743 8,323 -5

The restructuring program announced in the third quarter of 2012 is being implemented as

planned. The focus is on the optimization of shift models and the mothballing of plants as well

as structural adjustments in administration and sales. Cost structures will be further improved

through the creation of additional plant clusters and the shift of production to alternative

locations. This cost reduction program resulted in total savings of € 19.1 million for the

Wienerberger Group in 2013. The clay block and facing brick activities in the Netherlands,

Belgium, Germany and France represent a key element of these measures and, consequently,

most of the Group-wide cost savings were recorded in the Clay Building Materials Western

Europe Segment.

Operating Segments

Difficult market environment and severe weather in Europe

Average prices generally reflect 2012 levels

Restructuring program proceeding as planned

90

Following the normalization of demand in a number of markets during the second half of

2013, we are expecting further stabilization to slight growth in Europe during 2014. At the same

time we still see a highly differentiated business environment, which makes a general statement

difficult. Positive developments in single- and two-family house construction in Great Britain,

Poland and Russia as well as a stable environment in Germany, Belgium and the Czech Republic

will be contrasted by ongoing difficult market conditions in France, the Netherlands, Italy and

Hungary. Based on the weather-related lower comparative data from the first half of 2013, we are

forecasting a moderate increase in volumes for all product groups and an improvement in revenues

and earnings during 2014.

Clay Building Materials Western Europe The Clay Building Materials Western Europe Segment was hit particularly hard by the long

winter and the difficult market environment in the first half of 2013. The third quarter brought

increasing normalization on the relevant markets, which was supported by milder weather in the

fourth quarter. However, positive impulses in individual markets were unable to completely

offset the volume declines in clay blocks and roof tiles from the first half-year. The market

recovery in Great Britain led to an increase in facing brick volumes over the 2012 level.

Revenues in Western Europe fell by 4% to € 1,089.9 million in 2013. The decline in volumes

was only offset in part by slightly higher average prices and cost savings from the restructuring

program. Operating EBITDA declined 4% year-on-year to € 131.1 million.

Clay Building Materials Western Europe 2012 2013 Chg. in %

Third party revenues in € mill. 1,129.6 1,089.9 -4


Operating EBIT in € mill. 31.8 34.4 +8

CFROI in % 5.0 4.8 -


Capital employed in € mill. 1,426.2 1,357.1 -5

Ø Employees 6,227 5,940 -5

Sales volumes clay blocks in mill. NF 2,203 2,060 -6

Sales volumes facing bricks in mill. WF 1,205 1,262 +5

Sales volumes roof tiles 1) in mill. m² 23.55 22.76 -3

1) Sales volumes of clay and concrete roof tiles incl. accessories; the comparable prior year value was adjusted

Germany, the largest market in the region, registered a slight upward trend in building

permits for single- and two-family houses. In spite of this development, housing starts were

slightly lower than the previous year due to the severe weather during the first six months and

the lack of capacity expansion in the construction industry. The result was a decline in sales

volumes of facing bricks and roof tiles. The positive market trend in the second half of 2013 was,

however, reflected in a slight increase in clay block volumes for the full year. Shifts in the mix to

premium products allowed for price adjustments to cover cost inflation. Together with the

implementation of optimization measures, this led to stable earnings.

Differentiated outlook for new residential construction in Europe

Lower volumes of clay blocks and roof tiles, but slightly higher average prices

Price adjustments to offset cost inflation in Germany

Wienerberger AG

Annual Report 2013

Management Report Operating Segments

91

In France, the downturn in single- and two-family house construction and renovation

continued throughout 2013. This development was reflected in a contraction in clay block and

roof tile volumes for the reporting year. The resulting higher unit costs led to a decline in

earnings that was only offset in part by a slight increase in average prices and the implementation

of restructuring measures. On a positive note, bricks continue to gain market shares over

concrete as a wall building material.

The Netherlands experienced a further sharp drop in new residential construction and

renovation from an already low level. Real estate prices appear to be stabilizing, but many

homeowners are facing property values that are lower than the related mortgages. In addition,

restrictive bank lending represents a major problem for the market. Average prices remained

stable, but the existing situation led to sharp volume declines in all product groups and lower

revenues in 2013. However, earnings remained stable due to the realized optimization measures.

In Belgium, single- and two-family house construction also weakened slightly during the

reporting year and led to a decline in volumes of clay blocks, facing bricks and roof tiles. This

downward trend slowed during the second half of 2013, but business development was unable to

offset the volume declines resulting from the long winter and weak market environment. Shifts

in the mix to premium products and price adjustments to offset cost inflation supported an

improvement in average prices for all product groups. These factors, in total, led to a

year-on-year decline in revenues and earnings in Belgium.

Single- and two-family house construction weakened slightly in Switzerland and

substantially in Italy during the reporting year. Lower clay block volumes led to a decline in

revenues in both countries. In Switzerland, earnings remained stable due to the positive

development of the roofing business.

The “Help to Buy” stimulus program launched by the British government led to the start of

recovery in new residential construction and renovation from a low level in 2013. The result was

a sound year-on-year increase in volumes of facing bricks and roof tiles. Wienerberger’s

customers in Great Britain include large property developers, above all in the facing brick

business. A number of framework agreements concluded with those developers during 2012 held

the increase in margins below volumes for the reporting year. The successive renegotiation of

these agreements should lead to price adjustments in excess of cost inflation in 2014. The

roofing business made a solid contribution to revenues and earnings in 2013, which was reflected

in an increase in operating earnings in Great Britain.

For 2014, we expect general stabilization to slight growth on the markets in Western Europe.

Further steady declines in single- and two-family house construction are projected, above all for

the Netherlands and France. However, the previously implemented restructuring measures

should lead to positive earnings contributions. Germany, Belgium and Switzerland are expected

to see stable to slightly positive development, and the market recovery in Great Britain should

continue. Based on the weather-related low basis for comparison from the first half of 2013 and

further cost savings, we are forecasting an increase in revenues and earnings for the Clay Building

Materials Western Europe Segment in 2014.

Lower volumes due to difficult market in France

Further sharp decline on residential construction market in the Netherlands

Continued difficult market situation in Belgium

Market declines in Switzerland and Italy

Market recovery in Great Britain leads to higher volumes

Market stabilization to slight growth expected in Western Europe during 2014

92

Clay Building Materials Eastern Europe The effects of the debt crisis in Eastern Europe are still clearly visible. The market

environment in many countries of the Clay Building Materials Eastern Europe Segment

remained difficult throughout 2013 with in part double-digit declines in single- and two-family

house construction. Wienerberger’s proactive pricing policy not only led to a slight increase in

clay block volumes in contrast to the market trend, but also strengthened market positions.

Revenues roughly matched the prior year at € 312.4 million in 2013. Operating EBITDA was

negatively influenced by lower average prices and fell 14% year-on-year to € 40.2 million. In

order to protect our position as the innovation leader in Eastern Europe, we will continue to

focus on innovative products for this region. During the second half of 2013 we invested in a

production plant for high thermal insulating mineral wool-filled clay blocks in Austria and a

similar plant in the Czech Republic.

Clay Building Materials Eastern Europe 2012 2013 Chg. in %

Third party revenues in € mill. 314.2 312.4 -1


Operating EBIT in € mill. 4.6 0.7 -85

CFROI in % 4.5 3.9 -

Total investments in € mill. 14.4 17.1 +19

Capital employed in € mill. 469.0 419.2 -11

Ø Employees 2,516 2,383 -5

Sales volumes clay blocks in mill. NF 2,676 2,738 +2

Single- and two-family house construction in Poland, the largest market in this segment,

weakened significantly during 2013, but there were signs of consolidation towards the end of the

year. Wienerberger held clay block volumes nearly constant in this difficult market environment

with targeted sales promotions, but lower average prices led to a year-on-year drop in earnings.

The markets in the Czech Republic and Slovakia also weakened during the reporting year.

Wienerberger’s clay block volumes were stable to slightly higher as the result of proactive pricing

strategies, but lower average prices led to an earnings decline in both countries. In 2013 we built

a production plant for mineral wool-filled clay blocks in the Czech Republic. This investment

represents an important step forward, above all in two difficult markets, where we intend to

strengthen our innovation potential.

Difficult markets in Eastern Europe and lower average prices

Substantial decline on Polish market

Market declines in Czech Republic and Slovakia in 2013

Wienerberger AG

Annual Report 2013


93

The construction industry in Hungary is still negatively influenced by the aftereffects of the

debt crisis. High unemployment and structural problems in the banking sector also prevented a

trend reversal in 2013, and single- and two-family house construction fell further from the

already very low level. In this difficult environment, Wienerberger was able to increase volumes

based on lower average prices and strengthen its market shares.

In Austria, single- and two-family house construction, the relevant market segment for

Wienerberger, declined slightly in 2013. Average prices were slightly higher, but clay block

volumes declined and led to a drop in revenues and earnings. We continued to roll-out our

mineral wool-filled clay blocks on the Austrian market and started operations at a new filling

plant during the third quarter.

Business development in Russia remained sound during the reporting year. Clay block

volumes increased in the Moscow and Kazan regions, which are the relevant markets for

Wienerberger. However, earnings remained near the very good prior year level due to higher

production costs following the refitting of a plant and exchange rate losses.

In Romania and Bulgaria, the bottoming out that began during the previous year was

confirmed in 2013 and led to a year-on-year increase in clay block volumes. Average prices were

stable, and revenues and earnings improved.

Our outlook for the East European region in 2014 depends very much on the individual

countries. In Poland we see slight recovery in single- and two-family house construction from a

low level. The Czech Republic, Slovakia and Austria should remain stable, but further weakness

is projected for Hungary. In Russia, the positive market environment is expected to continue and

– depending on the development of the Ruble – lead to an increase in revenues and earnings. For

Romania and Bulgaria, we are optimistic that the current stabilization will continue at a low

level. In total, we expect an improvement in revenues and earnings for the Clay Building

Materials Eastern Europe Segment in 2014.

Further sharp market drop from low level in Hungary

Start of operations at new filling plant in Austria

Continued sound market development in Russia

Bottoming out in Romania and Bulgaria confirmed

Differentiated outlook on 2014

94

Pipes & Pavers Europe The Pipes & Pavers Europe Division recorded a sound increase in revenues and operating

EBITDA for 2013 based on the initial consolidation of Pipelife in the first five months. Revenues

rose by 45% to € 1,029.5 million and operating EBITDA by 49% to € 100.3 million, which led

to a slight improvement in the EBITDA margin to 9.7%. After an adjustment for this

consolidation effect, organic revenue growth was stable and operating earnings were slightly

higher.

Pipes & Pavers Europe 2012 2013 Chg. in %

Third party revenues in € mill. 711.2 1,029.5 +45

Operating EBITDA in € mill. 67.4 100.3 +49




Ø Employees 3,044 4,047 +33

Our plastic pipe business in Western Europe, which operates under the Pipelife brand, was

supported by a strong earnings contribution from the international project business, which offset

declines in a number of core markets. These market declines are related to the general weakness

in the construction industry and reflect the consolidation pressure on national budgets and a

resulting sharp drop in project orders. Steinzeug-Keramo, our specialist for ceramic pipe solutions,

was unable to duplicate the very strong prior year earnings. Growth in the West European core

markets offset the weather-related decline at the beginning of the year and reduced tenders in

Poland, and led to flat revenue development. However, operating EBITDA was negatively

influenced by standstill costs for unscheduled maintenance at one plant and structural

adjustments in production during the fourth quarter.

In Eastern Europe, Pipelife generated sound earnings growth for the full year due to the

turnaround in a number of countries. Semmelrock, our specialist for concrete pavers in Central-

East Europe, recorded an increase in operating EBITDA despite a decline in volumes. The

improvement in earnings at Semmelrock resulted primarily from the leaner cost structure that

followed the structural adjustments in 2012 and 2013. The positioning of the company as a

premium supplier also led to a shift in the product mix to premium products and system

solutions.

In the fourth quarter, the Pipes & Pavers Europe Division registered a 2% increase in

revenues to € 236.9 million and a 20% improvement in operating EBITDA to € 19.6 million.

Better weather supported a year-on-year increase in operating earnings for Pipelife and

Semmelrock, but non-recurring operating costs related to structural adjustments in production

had a negative effect on earnings at Steinzeug-Keramo. The development at Semmelrock was

particularly satisfying because the fourth-quarter volume growth offset in part substantial

declines from earlier quarters. Semmelrock also continued to benefit from cost savings measures

and the resulting substantial improvement in profitability.

Strong revenue and earnings growth for Pipes & Pavers Europe due to initial consolidation of Pipelife



95

In the Pipes & Pavers Europe Division, we expect stabilization to slight improvement in the

markets during 2014. Semmelrock should see a slightly better market environment in the core

countries of Eastern Europe, which should support a moderate increase in operating earnings as

well as higher capacity utilization and a resulting increase in margins. We also see generally stable

market development and an improvement in operating EBITDA for Steinzeug-Keramo due to

the absence of the non-recurring costs recorded in 2013. Pipelife’s markets should stabilize in

Western Europe and continue their modest recovery in Eastern Europe. France is expected to

record an improvement in earnings after the substantial market decline in 2013. However, we

cannot exclude a slight year-on-year earnings decline for Pipelife, because, as the current

viewpoint shows, it is unlikely that the record results generated by the international project

business in 2013 can be repeated in 2014. In total, we are forecasting a stable development to

slight increase in operating earnings for the Pipes & Pavers Europe Division.

Pipes & Pavers Western Europe The Pipes & Pavers Western Europe Segment recorded an increase of 51% in revenues to

€ 592.8 million and 48% in operating EBITDA to € 65.2 million in 2013. This strong growth was

driven by the initial consolidation of Pipelife for the first five months. The slight decline in

margins resulted mainly from non-recurring costs and the resulting lower earnings at

Steinzeug-Keramo, while operating earnings at Pipelife remained nearly constant in year-on-year

comparison.

Pipes & Pavers Western Europe 2012 2013 Chg. in %

Third party revenues in € mill. 392.2 592.8 +51



CFROI 1) in % 19.1 19.6 -



Ø Employees 1,604 1,780 +11

1) 2012 calculated on a pro-forma 12-month basis

Expenditures for infrastructure projects declined during the reporting year due to the

consolidation pressure on government budgets. This development was compounded by severe

weather at the beginning of the year and only offset in part by a mild start into the winter during

the fourth quarter. The markets in France and the Netherlands were particularly challenging in

2013. The sharp drop in construction activity in these countries led to a decline in revenues and

earnings. The market weakness was also reflected in increased competitive pressure, above all in

France. Pipelife’s Nordic core markets had the expected stabilizing effect on business

development and, in total, generated slightly higher earnings. The international project business

registered a sound increase in EBITDA based on sales of LLLD pipes (pipes with a diameter of

up to 2.5 meters and a length of up to 600 meters) and fiber-reinforced pipes from the

SoluforceTM line. In the West European plastic pipe business, revenues were stable and operating

EBITDA rose by a moderate amount. The stabilization of demand that took hold in the second

quarter continued throughout the rest of the year. Pipelife recorded stable revenues in the third

quarter, but higher revenues and earnings in the fourth quarter as a result of the mild weather.

Stable development to slight improvement in earnings expected for Pipes & Pavers Europe in 2014

Sound earnings growth due to initial consolidation of Pipelife in first five months

96

Steinzeug-Keramo, our specialist for ceramic pipe solutions, reported nearly stable revenue

development in 2013. Average prices were moderately higher in year-on-year comparison, but

volumes declined slightly, which resulted primarily from the difficult weather during the first

four months and a reduction in public sector project tenders for wastewater disposal on a

number of East European markets. Growth in Western Europe, above all in the company’s home

market of Germany, nearly offset the lower volumes in Eastern Europe and the weather-related

weak start into the year. Exports to the Middle East weakened from a good level towards

year-end, and recorded slightly lower volumes for the full year. Operating EBITDA for the

Steinzeug-Keramo Group declined year-on-year because of standstill costs for unplanned

maintenance and non-recurring costs related to structural adjustments in production that were

implemented and recognized in the fourth quarter.

For 2014, we expect a slight improvement in the market environment for the plastic pipe

business and increasing profitability on the West European core markets. Our efforts will be

directed to realizing sound earnings growth in France after the unsatisfactory results recorded for

the reporting year. Earnings in the Nordic markets should be stable to slightly positive. However,

the current viewpoint shows that the record prior year results in the international export

business will not be duplicated and a slight earnings decline in the West European plastic pipe

business is therefore possible. We are projecting higher volumes for our ceramic pipe solutions in

2014 with growth, above all, in Germany and Poland. The other core markets should at least

remain stable, yet the difficult conditions in the Czech Republic are likely to continue. Higher

volumes, leaner cost structures and the absence of non-recurring costs for structural adjustments

should support a sound improvement in earnings. The Pipes & Pavers Western Europe Segment

should generate slightly higher revenues and nearly stable earnings in 2014.

Operating earnings at Steinzeug-Keramo negatively influenced by non-recurring costs

Stable earnings expected for 2014



97

Pipes & Pavers Eastern Europe The Pipes & Pavers Eastern Europe Segment recorded an increase of 37% in revenues to

€ 436.7 million and 50% in operating EBITDA to € 35.1 million for the reporting year. The

sound earnings growth in this segment also resulted primarily from the consolidation of Pipelife

in the first five months of 2013.

Pipes & Pavers Eastern Europe 2012 2013 Chg. in %



Operating EBIT in € mill. 3.7 12.9 >100

CFROI 1) in % 8.9 9.4 -



Ø Employees 1,440 2,267 +57


Pipelife increased revenues and earnings in Eastern Europe during 2013, despite very

different economic conditions on the individual markets. Greece and Bulgaria reported a sound

improvement in volumes from a low level, which was accompanied by solid year-on-year

earnings growth. Greece, above all, benefited from the extensive structural adjustments

implemented in recent years as a reaction to the difficult market environment. We gained market

shares in both countries. In Austria, the largest single market in the region, the fourth quarter

failed to confirm the third-quarter stabilization of earnings and resulted in a decline in revenues

and earnings for the full year. Pipelife’s other key markets in Eastern Europe, e.g. Poland, Russia

and Turkey, were nearly constant. Higher volumes in Poland during the second half-year almost

offset the weather-related earnings decline in the first six months. In Hungary and the Czech

Republic, Wienerberger was unable to disengage from the general downturn in construction and

recorded lower revenues and earnings.

Semmelrock, our concrete paver specialist in Central-Eastern Europe, generated solid

performance in a difficult market environment during the reporting year. Volumes were 11%

lower because of the restrictive tenders by public authorities, weaker demand from the private

sector and the severe weather during the first four months, but operating earnings increased

year-on-year. Semmelrock benefited, above all, from the implementation of cost savings

measures and the resulting improvement in production, sales and administrative cost structures.

In addition, strict price management and a shift in the mix to premium products held average

prices constant at the prior year level. Semmelrock was also able to gain market shares in

countries like the Czech Republic, Hungary and Bulgaria despite strong competitive pressure.

Mild weather in the fourth quarter supported further volume growth and a subsequent

improvement in operating EBITDA.

Higher earnings despite decline in concrete paver volumes

98

For 2014, we expect a stabilizing market environment and an improvement in revenues and

earnings for the Pipes & Pavers Eastern Europe Segment. The restructuring measures have

generally been completed at Semmelrock, and we expect the positive effect on earnings to

continue to unfold in 2014. Austria should generate higher earnings because of the positive

effects from the extensive structural adjustments in sales and administration. In Poland, the

largest single market for the Semmelrock Group, the market consolidation in the second half of

2013 should be followed by further moderate growth and a subsequent increase in revenues and

earnings. We also expect a moderate improvement in earnings for Pipelife. With regard to the

two core markets in the region, we are projecting a sound increase in operating earnings and a

continuation of the fourth-quarter momentum in Poland and moderate earnings growth for

Austria. Earnings should also improve in Greece, Bulgaria and Turkey. However, our outlook on

South-Eastern Europe remains cautious because visibility is very limited and individual major

projects can have a significant influence on results. In total, we expect moderate revenue and

earnings growth for Pipes & Pavers Eastern Europe in 2014.

North America Our business in the USA was negatively affected during the first six months by a severe

winter that led to the postponement of housing starts. The first signs of recovery in US

residential construction subsequently appeared at mid-year and continued into the fourth

quarter. Slight volume growth in the first half of 2013 was followed by a strong rise in the

demand for bricks towards the end of the year. We used the positive market environment to

reduce inventories, above all in the fourth quarter. Average brick prices were slightly lower

year-on-year due to price pressure in selected regional markets that was increased by destocking

at year-end. However, volume growth and strict cost management led to an improvement in

brick margins. In Canada, we maintained our position in a difficult market environment and held

margins constant in spite of a decline in volumes. Sales volumes of facing bricks rose by 12%

year-on-year in 2013.

The 2013 financial year includes our North American plastic pipe business, which operates

one plant in Arkansas, for the full 12 months (initial consolidation as of May 31, 2012). In

addition to water management products, we also produce pressure-resistant, fiber-reinforced

pipes that are particularly well suited for high pressure applications in the oil and gas industry.

The North American plastic pipe business recorded only a slight decline in operating earnings

compared with the challenging basis in the very good prior year.

The North America Division reported a 16% increase in revenues to € 224.7 million in

2013, above all due to the initial inclusion of the North American plastic pipe business.

Operating EBITDA rose by a strong 35% to € 13.2 million.

Revenue and earnings growth expected for 2014

Continued recovery in US residential construction; difficult market environment in Canada

North American plastic pipe activities included for full 12 months



99

North America 2012 2013 Chg. in %



Operating EBIT in € mill. -14.7 -9.3 +37

CFROI 1) in % 1.7 1.9 -



Ø Employees 1,064 1,213 +14

Sales volumes facing bricks in mill. WF 297 333 +12


Rising mortgage interest rates had a negative effect on the demand for loans in the USA

beginning in mid-2013. However, the National Association of Home Builders (NAHB) is

forecasting a continuation of the positive trend in US residential construction during 2014 based

on a range of positive indicators. Wienerberger therefore expects further steady recovery in

single- and two-family house construction in the USA and an increase in the demand for bricks.

In Canada, we do not see a trend reversal and assume the market will remain difficult. The

market environment for our plastic pipe business should remain stable, and we plan to expand

our customer base and play an active role in the substitution process to plastic pipes.

Holding & Others The Holding & Others Division includes the costs for the corporate headquarters as well as

our brick activities in India. Wienerberger is the only supplier of industrially manufactured bricks

in India and operates with one plant in Bangalore, a city with an established middle class. This

market was characterized by steady positive development in 2013. Rising volumes of clay blocks

and higher average prices led to an increase in revenues and earnings. Revenues in the Holding &

Others Division rose by 4% to € 5.6 million, while operating earnings fell to € -18.2 million

following the creation of provisions for bonuses.

Holding & Others 2012 2013 Chg. in %


Operating EBITDA in € mill. -15.2 -18.2 -21

Operating EBIT in € mill. -22.3 -22.6 -2


Capital employed in € mill. 8.8 12.1 +37

Ø Employees 209 204 -2

The approaching elections in India make forecasts for 2014 difficult. However, the previous

growth in our relevant region leads us to expect a further slight increase in revenues and earnings

for our brick activities in India.

Continued positive development in Indian brick business

Higher revenues and earnings expected in 2014

100

We expect increasing stabilization and slight market growth in Europe during 2014.

However, developments in single- and two-family house construction on Wienerberger’s relevant

brick markets in Europe present a widely differentiated picture. Growth is forecasted for markets

like Great Britain, Poland and Russia, but construction in the Netherlands, France, Italy and

Hungary will continue to decline. Most of the other markets should remain stable. In North

America, a wide range of positive early indicators points to continuing recovery as well as a

double digit increase in housing starts. The Pipes & Pavers Europe Division should record stable

to slightly positive market development in all business units.

This slight upward market trend leads us to expect an increase in revenues and earnings for

2014. The weak prior year basis creates a potential for volume growth, above all in the first

half-year, to the extent that weather conditions remain normal. The related improvement in

capacity utilization will have a positive effect on the profitability of the Wienerberger Group. In

the Clay Building Materials Europe Division, we are assuming moderate volume growth and our

goal is to pass on cost inflation to the market. We believe we can reach this goal in Western

Europe and are cautiously optimistic for Eastern Europe, but we must wait for the start of the

construction season. In the plastic pipe business, we cannot exclude a slight decline in operating

earnings. The stable European core markets should generate higher revenues and earnings, but

the current point of view indicates that the excellent prior year results from the international

project business will not be duplicated. The forecasts for Semmelrock and Steinzeug-Keramo

show an improvement in revenues and earnings. We will also conclude the restructuring program

as planned and realize approx. € 17 million of cost savings in 2014. The sale of real estate should

contribute a further € 10 million to earnings for the year.

The generation of strong cash flows remains the focal point of our medium-term goals.

These funds will be used, above all, to repay debt and to finance organic growth, investments and

smaller, value-creating takeovers. Strict financial discipline with the goal of holding the ratio of

net debt to operating EBITDA below the targeted 2.5 years forms our strong framework for the

use of funds. Our goals for the operating business are to generate further organic growth and

expand our market positions by focusing on innovative, high-quality products and a

comprehensive range of supporting services. Normal capex should lead to cash outflows of

€ 125 million in 2014. We will also evaluate smaller, value-creating acquisitions in the future,

whereby the strategic focus will be to expand our industrial base and increase the share of

revenues generated on the renovation market.

Events after the balance sheet date There were no events requiring disclosure between the balance sheet date of December 31,

2013 and authorization for issue on February 24, 2014.

This annual report includes information and forecasts that are based on the future development of the Wienerberger Group and its member companies. These forecasts represent estimates, which were prepared based on the information available at this time. If the assumptions underlying these forecasts are not realized or risks – as described in the risk report – should in fact occur, actual results may differ from the results expected at this time. This annual report is not connected with a recommendation to buy or sell Wienerberger AG securities.

Outlook and Goals

Slight market growth in Europe and continued recovery in North America expected for 2014

Increase in revenues and earnings projected for 2014

Focus remains on generation of strong cash flows

Wienerberger AG

Annual Report 2013

Management Report Outlook and Goals

Additional Information

on the Company

101

Research and Development Research and development (R&D) form an integral part of strategic planning at

Wienerberger and represent key activities for the Group. In these areas we work to optimize

production processes and to continuously improve and develop our products and system

solutions in all our application areas – from energy-efficient building concepts to environ-

mentally compatible pavers and supply and sewerage systems. Our goal is to protect and further

expand our market positions through cost and technology leadership and product innovation.

R&D at Wienerberger is managed centrally, but implemented locally based on close

cooperation between the various R&D departments and local management and engineers. This

ensures the fast and efficient rollout of successful developments throughout the Group. In 2013

R&D expenditures amounted to € 11.4 million and innovative products generated 24.2% of

revenues.

Wienerberger’s commitment to sustainability is reflected in the continuous improvement of

its production processes. The projects in our energy-intensive ceramic production (bricks and

ceramic pipes) concentrate on reducing energy consumption in the drying and firing process.

Other research focal points include resource conservation in production and the responsible

processing of raw materials. Wienerberger is a leader in the recycling of products through the raw

materials mix. For certain types of vitrified clay pipes, we have been able to use up to 60% of

ceramic recycling materials in production.

Research activities for plastic pipes are directed to optimizing the production process and

refining formulas for the raw materials mix. In this area, we are working to increase the use of

recycled products as raw materials and reduce product weight. The projects for concrete pavers

are designed to improve the raw material mixtures, in particular by reducing the cement content.

Another focal point is the development of new technologies to improve surface structures.

Another key building block for Wienerberger’s sustainable success is the continuous

development of the product portfolio and the improvement of existing products. Wienerberger

operates several research centers in Europe that are specialized by product group. Their work is

focused, above all, on the development of innovative products and system solutions for

sustainable and energy-efficient construction. Our product management specialists work closely

with the various marketing and sales departments to ensure that new developments always meet the

needs of our customers. The international rollout of new products is managed centrally, but the

products are adapted by our local specialists to meet the requirements of their respective

markets. Additional information on our product innovations can be found on page 26 to 29.

Additional Informationon the Company

R&D is one of the key points in strategic planning

R&D is managed centrally, but implemented locally

Process optimization for ceramic products in the interest of sustainability

Continuous optimization of raw material mixtures for plastic pipes and concrete pavers

Further development of the product portfolio is a key element of our sustainable success

102

Sustainability Management In recent years our approach to sustainability management has become substantially more

professional and more firmly anchored in the company. Responsibilities for sustainability have

also been clearly defined. In addition to a Group-wide sustainability officer who reports to the

Chief Executive Officer of Wienerberger AG, each of our country organizations and subsidiaries

has designated a staff member who is responsible for sustainability and the implementation of

the respective Group guidelines and programs. These local staff members report directly to the

Wienerberger sustainability officer.

A Sustainability Steering Committee (SSC) is responsible for the definition of

Wienerberger’s sustainability strategy, key indicators according to GRI and goals for sustainable

development. The members of the SSC are in regular contact and meet as required. The Chief

Executive Officer of Wienerberger AG, Heimo Scheuch, is a member of this committee, which

ensures that sustainability always has top priority for the company. The SSC discusses progress

on the sustainability process and options for further actions. It also defines goals and measures

for implementation throughout the Group. In order to make our commitment to these goals

transparent, we published them for the first time in our 2012 sustainability report.

The Wienerberger sustainability report transforms our commitment into an obligation. It is

based on the standards defined by the Global Reporting Initiative (GRI) and represents an

integral part of a continuous process. All levels of management and our employees have taken on

shared responsibility for the implementation of measures to support a continuous improvement

in sustainability at Wienerberger. The sustainability report provides information on the current

status and further measures in the areas of employees, environmental protection in production,

sustainable products, social responsibility and stakeholder management. It also serves as an

instrument to monitor the progress of our sustainable development. We only publish a full

sustainability report every two years because our sustainability principles cover the long-term. In

the interim periods, we issue an update that presents the latest facts and figures as well as our

progress in specific areas. The next update is scheduled for release on June 24, 2014.

Internal audit, a staff department that reports directly to the Managing Board, reviews major

aspects of the sustainability program as part of its operational audits and reports the results to

the Managing and Supervisory Boards. These audits are based on an annual schedule and risk

assessment that are approved by the Managing Board and coordinated with the Audit

Committee of the Supervisory Board. Monitoring the internal control system in the accounting

process is one of the most important responsibilities of internal audit. Another duty is the review

of compliance with legal regulations and internal guidelines, for example the guidelines on

business gifts and competition law. Internal audit also evaluates compliance with Wienerberger

safety standards for employees and with selected areas of the Austrian Corporate Governance

Code, whereby the latter is mainly a focus of activities by the external auditor.

Sustainability management is anchored in the organization

Transparent communication of goals for first time in 2012 sustainability report

Sustainability report as part of a continuous process

Internal audit reviews individual aspects of the sustainability program


Management Report Additional Information

on the Company

103

Wienerberger Share and Shareholders Wienerberger recorded the strongest performance of all stocks in Austria’s leading ATX

index during 2013. The share started the reporting year at € 6.93 after a slight 0.6% loss in 2012.

In spite of the bad weather and the resulting limited construction activity in large parts of

Europe, Wienerberger traded 28% over this opening share price at mid-year. A slight correction

in July was followed by an increase to the annual high of € 13.21 on October 23, 2013, which

was supported by positive economic indicators in the USA and Great Britain. The Wienerberger

share closed 2013 with a plus of 66.3% at € 11.53. With this development, the share significantly

outpaced the ATX (+6.1%) and the DJ EURO STOXX® TMI Construction & Materials Index

(+25.5%).

After a sharp drop in the trading volume for the broader ATX Prime in 2012, the value-

based turnover (purchases and sales, double-count method) on the Vienna Stock Exchange rose

by 8% to € 38.3 billion in 2013. This development was influenced, above all, by the sound

development of industrial stocks despite a further decline in the trading volume.

The development of the Wienerberger share was similar, with a 9% increase in the value-

based turnover to € 1,005.1 million (purchases and sales, double-count method) that was driven

by strong share price performance during the reporting year. However, the trading volume

declined by a further 19%. The number of shares traded totaled 101.1 million (purchases and

sales, double-count method), which represents a turnover factor of 0.4 for Wienerberger’s

outstanding share capital on the Vienna Stock Exchange in 2013. In comparison with the average

daily trading volume, Wienerberger ranked tenth among the companies in the Austrian ATX

index. Over-the-counter sales in Vienna amounted to € 113.4 million (single-count method), or

36% more than the € 83.3 million recorded in 2012. On the Austrian Futures and Options

Exchange (ÖTOB) 8,656 option contracts with a total value of € 7.6 million were traded for

Wienerberger shares.

Wienerberger share price increases by 66% in 2013

Value-based turnover in Vienna Prime Market rises by 8% in 2013

Wienerberger share with 9% increase in value-based turnover

104

Key Data per Share 2012 2013 Chg. in %

Earnings in € -0.61 -0.34 +44

Dividend in € 0.12 0.12 0

Free cash flow 1) in € 1.42 0.81 -43

Equity 2) in € 16.26 15.31 -6

Share price high in € 9.49 13.21 +39

Share price low in € 5.53 7.13 +29

Share price at year-end in € 6.93 11.53 +66

P/E ratio high -15.6 -38.9 -

P/E ratio low -9.1 -21.0 -

P/E ratio at year-end -11.4 -33.9 -

Shares outstanding (weighted) 3) in 1,000 115,063 115,063 0

Market capitalization at year-end in € mill. 814.3 1,354.5 +66

Ø Stock exchange turnover/day 4) in € mill. 3.7 4.1 +11

1) Cash flow from operating activities less cash flow from investing activities plus growth capex 2) Equity including non-controlling interests, excluding hybrid bond 3) Adjusted for treasury shares 4) Double-count method

Subject to further market developments and the best possible use of financial resources, the

Managing Board will make a recommendation to the 145th Annual General Meeting on May 16,

2014, calling for the payment of a € 0.12 dividend per share. The amount of future dividends

will depend on the market development and the availability of profitable growth projects.

Shareholder Structure Wienerberger AG is listed with 117.5 million shares of zero par value common stock

(bearer shares) in the Prime Market segment of the Vienna Stock Exchange. There are no

preferred or registered shares and no restrictions on the common shares. The principle of

“one share – one vote” therefore applies in full. In the USA the company trades on the OTC

market through an ADR Level 1 Program of the Bank of New York. With market capitalization

of € 1,354.5 million and a weighting of 3% in the ATX at year-end 2013, Wienerberger is one of

the largest publicly traded companies in Austria.

Wienerberger is a pure free float company and has no core shareholder. All of the shares

represent free float, which is held by Austrian and international investors. In accordance with

§ 91 of the Austrian Stock Exchange Act, which requires the reporting of changes in significant

holdings, we received the following notification: Dodge & Cox Inc., which is headquartered in

the USA has held over 5% of the outstanding Wienerberger shares since February 19, 2014. First

Eagle Investment Management, LLC, which is also located in the USA, has held a stake of over

5% since September 14, 2011. Black Creek Investment Management Inc., which is situated in

Canada, has held more than 5% of Wienerberger shares since September 19, 2012. There are no

other reports of shareholdings that exceed 4%. Wienerberger holds 2,464,138 treasury shares,

which represent 2.1% of the total shares issued.

Recommended dividend of € 0.12 per share



on the Company

105

Wienerberger has a widely diversified shareholder structure, which is typical for an

international publicly traded company. A January 2014 survey of the shareholder structure

showed the majority of institutional investors in North America (52%) as well as the UK (14%).

Most of Wienerberger’s shares are held by institutional investors (70%), while the share of

private investors equals 28%. An analysis of the various investor strategies shows value-oriented

investors with a share of 57%, followed by GARP investors (23%) and index- as well as

growth-oriented investors (7% each).

Information on Capital, Shares, Voting and Control Rights The 140th Annual General Meeting in 2009 approved the creation of authorized capital

totaling € 42.0 million (50% of share capital at that time) through the issue of up to 42.0 million

new shares within a period of five years. Capital was increased in 2009 through the issue of

33.6 million shares, and Wienerberger now has authorized capital of 8.4 million shares remaining.

The legal subscription rights of shareholders can be excluded under certain circumstances. The

Managing Board was also authorized to issue convertible bonds in one or more segments with

the approval of the Supervisory Board and to carry out a conditional capital increase for the issue

of new shares to the holders of the convertible bonds. The total of all these capital measures is

limited to the issue of up to 42.0 million new shares. The 140th Annual General Meeting also

authorized the Managing Board to issue up to € 200 million of participation rights, also in

multiple segments, during a period of five years, contingent upon the approval of the Supervisory

Board. The approvals of the 140th Annual General Meeting expire on May 13, 2014.

The 143rd Annual General Meeting in 2012 authorized the Managing Board to repurchase

the company’s shares, up to the legally defined limit, during a period of 30 months. Since

Wienerberger has already repurchased 2.1% of the issued shares, 7.9% are still available for

possible repurchase under the current legal regulations.

Change of control clauses, which can result in the termination of a contract, are included in

the employment contracts with the members of the Managing Board, in the terms of the 2010,

2011, 2012 and 2013 corporate bonds, in the 2007 hybrid bond and in the syndicated term loans

and other loans concluded in 2008 and 2012. Further information on the composition of

Wienerberger capital, types of shares, limitations and rights as well as the authorization of the

Managing Board to issue or buy back shares are discussed in the notes under note 23 (“Capital

and reserves”) starting on page 140.

Share buyback

Change of control clauses in Managing Board contracts, corporate bonds and loans

106

Risk Management Global operations expose the Wienerberger Group to a variety of risks. The goal of our risk

management system is to identify risks at an early stage and implement suitable measures to

minimize any divergence from corporate goals. The related procedures require the identification,

assessment, management and monitoring of risks, and represent an integral part of our activities

in this area. The risk assessments prepared in prior periods are updated annually by top and

senior management. Based on the probability of occurrence and the potential impact on the

Group, the identified risks are weighted according to their significance and the 15 major risks are

analyzed in detail. In 2013 this process led to a change in the weighting of individual risks and

the addition of new risks to our risk catalogue. The major risks are described in detail below, and

a detailed description of all risks is provided in the risk report beginning on page 163 of the notes.

Market, Production and Price Risks Business development in the Clay Building Materials Division is heavily dependent, above

all, on new residential construction – a sector whose development is closely linked to the

economic environment in the respective countries. New residential construction is also

influenced by consumer confidence, long-term interest rates and the availability of mortgages and

financing for housing projects. In order to reduce the dependence on new residential

construction, we are pursuing a strategy to expand our renovation- and infrastructure-related

businesses. Clay roof tiles are an important focus of these efforts, since more than half of

revenues are generated in renovation. Pavers and pipe systems, which are also used in

infrastructure projects, are two further focal points. Weak economic growth and a subsequent

decline in the demand for building materials increase the risk of excess production capacity. This

can lead to greater pressure on prices and uncovered costs and, as a consequence, could make

price adjustments necessary. In 2013 we were able to cover most of the higher input costs in

Western Europe with price increases. Eastern Europe and North America presented a different

picture because we were faced with pressure on prices because of the difficult market conditions

and competitive situation. We reduce the effects of capacity risks on earnings by continuously

monitoring our plant network and making the necessary adjustments through temporary

shutdowns, shift models and/or the relocation of production to reflect market demand.

The plastic pipe business is substantially influenced by the development of raw material

prices, which correlates closely with the price of crude oil. Synthetic polymers comprise a major

part of the production cost for plastic pipes. The volatility of raw material prices has increased

considerably in recent years. Flexible pricing is therefore required to limit the effects of these

price changes and/or pass them on to the market. Fast price management is also a decisive factor

for the sustainable protection of earnings.

Wienerberger is also exposed to a risk of substitution through its competition with other

building materials for roofs, walls, pavers and pipe systems. Our strong position as a quality

leader and investments in the development of premium products should allow us to minimize

this risk.

Identification and analysis of 15 major risks as part of risk management process

Business development for Clay Building Materials is heavily dependent on new residential construction

Flexible pricing policy to reduce highly volatile raw material prices in plastic pipe business

Substitution risk through competition with other building materials

Wienerberger AG

Annual Report 2013


on the Company

107

Financial Risks The protection and maintenance of a strong capital base is a central objective for

Wienerberger AG. We proactively strengthened our liquidity through the successful placement

of bonds in a still challenging economic environment and have a balanced financing structure.

Wienerberger is not only exposed to liquidity risk, but also to foreign exchange and interest rate

risks. These risks are reduced through the targeted use of hedges. A description of the financing

situation is provided in the Financial Review beginning on page 77; the financial risks are

discussed on page 165 of the notes.

Procurement Risks Energy represents a key resource for our production processes in the Clay Building

Materials Europe Division and at Steinzeug-Keramo. Wienerberger works to counteract the risk

of an energy shortage and the resulting volatility in energy prices by continuously monitoring the

situation on key markets, by concluding forward contracts that define purchase prices at an early

point in time and by closing long-term supply contracts. For 2014 we have already signed

contracts that cover a large part of our natural gas and electricity requirements. The most

important input factor at Pipelife is plastic granulate. In addition to the above-mentioned price

risk for these granulates, the limited storage capacity in our plants leads to a risk that our supplies

of this key raw material may not always be sufficient to cover production requirements. Any

interruption in supplies would lead to a production standstill. We counter procurement risks by

developing alternative suppliers for almost all raw materials.

Legal Risks Due to our positions in specific markets, the pricing policies of our subsidiaries are actively

monitored by competition authorities. Price-fixing agreements are not part of Wienerberger’s

business policies; our internal guidelines expressly prohibit such activities and call for severe

sanctions in the event of violations. From the present point of view, there are no risks that could

endanger the continued existence of the Wienerberger Group. Insurance policies have been

concluded to cover specific guarantee and warranty risks. The scope of these insurance policies is

analyzed regularly based on the maximum cost associated with the insured risk and the relevant

insurance premium. In order to counter potential risks that could result from the wide variety of

tax, competition, patent, antitrust and environmental regulations and laws faced by Wienerberger,

management decisions are based on consultations with company and outside experts.

Compliance with corporate regulations and the supervision of employees in their interaction

with risk is a basic responsibility of all Wienerberger managers.

In order to avoid and manage risk, the local companies deliberately take on risks only as part

of their operating activities and always evaluate these risks in relation to the potential gains or

opportunities. Any speculative actions outside the scope of operating activities are prohibited.

Risks that are not directly related to operating activities, for example financial risks, are

monitored and managed by the Group’s parent company. The most important instruments for

the monitoring and management of risk are planning and controlling processes, Group guidelines,

regular reporting and the internal control system (ICS).

Protection of healthy capital base through financial discipline

Hedging and long-term supply contracts to counteract energy shortage

Group-wide guideline to ensure compliance with antitrust laws

Risks only taken on in operating business

108

Internal Control System The internal control system (ICS) of Wienerberger AG not only provides management with

standardized reporting and corporate guidelines, but also represents a comprehensive tool for

analyzing and managing the uncertainties and risks arising from business activities. This system is

based on the standards defined in the COSO, a recognized international guideline for internal

control procedures. Within the context of the ICS, the Managing Board issues a guideline that

defines binding Group-wide rules for the accounting process to be used in preparing the annual

and interim financial statements. Business transactions are recorded through standardized

processes based on a uniform chart of accounts. Wienerberger’s consolidated financial statements

and interim financial statements are prepared in accordance with IFRS based on a fast close

process. The financial statements of all subsidiaries are reviewed by the finance and controlling

departments of the respective business units and the corporate reporting department in a

two-step process, consolidated and subsequently released by the Managing Board of

Wienerberger AG for distribution to the Supervisory Board.

Business forecasting at Wienerberger follows an annual schedule that is designed as

integrated planning in a bottom-up process. Included here are the preparation of budgets for the

income statement, balance sheet, cash flows and capital expenditure for the following financial

year and medium-term planning for a four-year horizon. A key element of the internal control

and risk management system is the monthly comparison of actual results with the forecast for

the respective period. In addition, the subsidiaries prepare a revised projection of expected

annual results three times each year.

In keeping with the decentralized structure of the Wienerberger Group, local management

is responsible for the implementation of the internal control system. Internal audit, which is

organized as a staff function reporting to the Managing Board, monitors compliance with the ICS

by local management and evaluates operating processes for their risk potential and opportunities

for improvement. These activities are based on an annual audit schedule that is approved by the

Managing Board and coordinated with the Audit Committee. The internal audit department is

also responsible for monitoring compliance with legal directives, internal guidelines and

procedures as well as ad-hoc audits as requested by management. The results are reported to the

Managing Board of Wienerberger AG. Internal audit and corporate reporting provide the Audit

Committee with regular reports on major accounting and valuation procedures, the effects of

revisions to IFRS on the consolidated financial statements, significant changes in accounting

processes and the results of risk management analysis. The Audit Committee is also regularly

informed of audit results and relevant measures as well as the improvement of weaknesses

identified by the ICS.

The Group auditor evaluates the effectiveness of Wienerberger risk management each year,

and reports to the Supervisory and Managing Boards on the results of this analysis. The

functional capability of Wienerberger risk management was examined and confirmed by the

auditor in 2013. In addition, the control systems of individual corporate functions are tested as

part of the annual year-end audit.

Internal control system is a comprehensive tool for management

Annual planning process as key part of the ICS

ICS is implemented locally, but compliance monitored centrally by internal audit

Effectiveness of risk management audited and confirmed by KPMG

Wienerberger AG

Annual Report 2013


on the Company

Financial Statements Contents

109

110 Income Statement

111 Statement of Comprehensive Income

112 Cash Flow Statement

113 Balance Sheet

114 Changes in Equity Statement

116 Notes to the Financial Statements

116 General Information

116 Basis for the preparation of the consolidated financial statements (1)

116 Consolidated companies (2) 118 Basis of consolidation (3) 118 Significant accounting policies (4) 118 Assumptions and estimates (5)

119 Effects of new and revised standards (6)

121 Operating segments (7)

124 Notes to the Income Statement

124 Material expenses (8)

124 Depreciation, amortization and impairment of assets (9)

125 Personnel expenses (10)

125 Employees (11)

126 Other operating expenses (12)

126 Other operating income (13)

127 Reconciliation of results according to the cost of sales and total cost method (14)

128 Interest and other financial results (15)

129 Income taxes (16)

130 Earnings per share, recommendation for the distribution of profit/loss (17)

131 Notes to the Statement of Comprehensive Income

132 Notes to the Cash Flow Statement

132 Cash Flow from investing activities (18)

133 Notes to the Balance Sheet

133 Non-current assets (19)

138 Inventories (20)

138 Receivables, securities and other financial assets (21)

139 Other receivables, prepaid expenses and deferred charges (22)

140 Capital and reserves (23)

142 Provisions (24)

142 Employee benefits (25)

147 Deferred taxes (26)

147 Liabilities (27)

150 Contingent liabilities and guarantees (28)

151 Financial instruments (29)

153 Derivative financial instruments (30)

154 Information on financial instruments (31)

156 Significant Accounting Policies 162 Foreign exchange translation (32)

163 Risk Report

170 Other Information

170 Related party transactions (33)

171 Share-based payments (34)

172 Statement by the Managing Board

173 Group Companies

177 Auditor’s Report

FINANCIAL STATEMENTS

Contents

110

Notes 2013

in TEUR 2012

in TEUR

Revenues 2,662,943 2,355,549

(8-10, 12-14) Cost of goods sold -1,887,362 -1,660,985

Gross profit 775,581 694,564

(8-10, 12-14) Selling expenses -522,881 -486,637

(8-10, 12-14) Administrative expenses -161,355 -144,909

(12, 14) Other operating expenses -79,548 -83,778

(13, 14) Other operating income 43,484 51,793

Profit/loss before restructuring costs and impairment charges to property, plant and equipment and goodwill, and the release of a provision for an impending antitrust penalty 55,281 31,033

Restructuring costs and impairment charges to property, plant and equipment 0 -42,983

Impairment charges to goodwill 0 -9,768

(13) Release of a provision for an impending antitrust penalty 9,387 0

Profit/loss after restructuring costs and impairment charges to property, plant and equipment and goodwill, and the release of a provision for an impending antitrust penalty 64,668 -21,718

(2) Income from investments in associates and joint ventures -2,553 4,539

(15) Interest and similar income 7,817 10,664

(15) Interest and similar expenses -63,810 -61,355

(15) Other financial results -9,207 31,682

Financial results -67,753 -14,470

Profit/loss before tax -3,085 -36,188

(16) Income taxes -4,750 -4,348

Profit/loss after tax -7,835 -40,536

Thereof attributable to non-controlling interests -1,399 -2,744

Thereof attributable to hybrid capital holders 32,500 32,500

Thereof attributable to equity holders of the parent company -38,936 -70,292

(17) Earnings per share (in EUR) -0.34 -0.61

(17) Diluted earnings per share (in EUR) -0.34 -0.61

Income Statement

Wienerberger AG

Annual Report 2013

Financial Statements Income Statement

Statement of Comprehensive

Income

111

Notes 2013

in TEUR 2012

in TEUR

Profit/loss after tax -7,835 -40,536

(23, 32) Foreign exchange adjustments -68,992 30,978

Foreign exchange adjustments to investments in associates and joint ventures -2,257 7,942

(21, 23) Changes in the fair value of available-for-sale financial instruments 164 2,957

(23) Changes in hedging reserves 10,319 -385

Items to be reclassified subsequently to profit or loss -60,766 41,492

(23, 25) Actuarial gains/losses 5,999 -24,125

Actuarial gains/losses from investments in associates and joint ventures -608 -415

Items not to be reclassified subsequently to profit or loss 5,391 -24,540

Other comprehensive income -55,375 16,952

Total comprehensive income -63,210 -23,584

Thereof comprehensive income attributable to non-controlling interests -1,485 -2,827

Thereof attributable to hybrid capital holders 32,500 32,500

Thereof comprehensive income attributable to equity holders of the parent company -94,225 -53,257

Statement of Comprehensive Income

112

Notes 2013

in TEUR 2012

in TEUR


(9) Depreciation and amortization 197,961 194,663

(9) Impairment charges to goodwill 0 9,768

(9) Impairment of assets 13,368 37,003

Write-ups of fixed and financial assets 0 -175

Increase/decrease in long-term provisions and deferred taxes -24,138 -17,830

(2) Income from investments in associates and joint ventures 2,553 -4,539

Gain/loss from the disposal of fixed and financial assets -15,861 -53,413

(15) Interest result 55,993 50,691

Interest paid -53,465 -52,108

Interest received 7,105 9,048

Income taxes paid -15,784 -9,969

Gross cash flow 164,647 126,951

Increase/decrease in inventories 34,899 46,758

Increase/decrease in trade receivables -4,301 48,874

Increase/decrease in trade payables 15,185 -39,320

Increase/decrease in other net current assets -17,015 43,174

Changes in non-cash items resulting from foreign exchange translation -2,519 3,073

Cash flow from operating activities 190,896 229,510

Proceeds from the sale of assets (including financial assets) 19,930 21,467

Purchase of property, plant and equipment and intangible assets -106,619 -121,955

Payments made for investments in financial assets -103 0

Increase/decrease in securities and other financial assets -11,900 17,946

Net payments made for the acquisition of companies 0 -146,779

(18) Cash flow from investing activities -98,692 -229,321

Increase/decrease in long-term financial liabilities 237,315 210,864

Increase/decrease in short-term financial liabilities -30,316 -429,250

(23) Dividends paid by Wienerberger AG -13,808 -13,808

(23) Hybrid coupon paid -32,500 -32,500

Dividends paid to and other changes in non-controlling interests 0 3,000

Dividend payments from associates and joint ventures 3,169 13,041

Cash flow from financing activities 163,860 -248,653

Change in cash and cash equivalents 256,064 -248,464

Effects of exchange rate fluctuations on cash held -1,662 379

Cash and cash equivalents at the beginning of the year 242,288 490,373

Cash and cash equivalents at the end of the year 496,690 242,288

Cash Flow Statement

Wienerberger AG

Annual Report 2013

Financial Statements Cash Flow Statement

Balance Sheet

113

Notes 31.12.2013

in TEUR 31.12.2012

in TEUR

Assets

(19) Intangible assets and goodwill 842,897 882,060

(19) Property, plant and equipment 1,663,283 1,803,067

(19) Investment property 78,377 81,297

(19) Investments in associates and joint ventures 24,454 33,039

(19, 22) Other financial assets and non-current receivables 6,869 1,329

(26) Deferred tax assets 46,633 39,490

Non-current assets 2,662,513 2,840,282

(20) Inventories 666,026 700,925

(21) Trade receivables 203,467 199,166

(22) Receivables for current taxes 17,920 18,974

(22) Other current receivables 73,295 65,592

(21, 30) Securities and other financial assets 91,449 72,504

(18) Cash and cash equivalents 496,690 242,288

Current assets 1,548,847 1,299,449

Total Assets 4,211,360 4,139,731

Equity and Liabilities

Issued capital 117,527 117,527

Share premium 1,083,973 1,083,973

Hybrid capital 492,896 492,896

Retained earnings 803,254 855,998

Other reserves -221,071 -165,782

Treasury stock -24,324 -24,324

Controlling interests 2,252,255 2,360,288

Non-controlling interests 1,911 3,396

(23) Equity 2,254,166 2,363,684

(26) Deferred taxes 103,980 105,822

(25) Employee-related provisions 116,172 132,277

(24) Other non-current provisions 50,899 53,001

(27, 29) Long-term financial liabilities 836,121 858,708

(27) Other non-current liabilities 8,237 9,896

Non-current provisions and liabilities 1,115,409 1,159,704

(24) Current provisions 57,396 80,618

Payables for current taxes 12,359 14,670

(27, 29, 30) Short-term financial liabilities 290,897 58,062

(27) Trade payables 268,334 253,149

(27) Other current liabilities 212,799 209,844

Current provisions and liabilities 841,785 616,343

Total Equity and Liabilities 4,211,360 4,139,731

Balance Sheet

114

Notes in TEUR Issued capital

Share premium

Hybrid capital

Retained earnings

Balance on 31.12.2011 1) 117,527 1,084,180 492,896 940,098

Profit/loss after tax -37,792

(23, 32) Foreign exchange adjustments

Foreign exchange adjustments to investments in associates and joint ventures

Changes in hedging reserves

Changes in other reserves

Total comprehensive income -37,792

(23) Dividend payment/hybrid coupon -46,308

Capital increase/decrease

Increase/decrease in non-controlling interests -207

Balance on 31.12.2012 117,527 1,083,973 492,896 855,998

Profit/loss after tax -6,436

(23, 32) Foreign exchange adjustments

Foreign exchange adjustments to investments in associates and joint ventures

Changes in hedging reserves

Changes in other reserves

Total comprehensive income -6,436

(23) Dividend payment/hybrid coupon -46,308

Balance on 31.12.2013 117,527 1,083,973 492,896 803,254

1) The data for 2011 were adjusted to reflect the premature application of IAS 19 Employee Benefits and the change to the equity method in 2012 for companies previously included

through proportionate consolidation. 2) AfS (available-for-sale) financial instruments

Changes in Equity Statement

Wienerberger AG

Annual Report 2013

Financial Statements Changes in Equity Statement

115

Other reserves

Actuarial gains/losses

AfS reserve 2)

Hedging reserve

Translation reserve

Treasury stock

Controlling interests

Non-controlling interests Total

-27,286 -1,822 48,281 -201,990 -24,324 2,427,560 3,259 2,430,819

-37,792 -2,744 -40,536

30,969 30,969 9 30,978

7,942 7,942 7,942

-385 -385 -385

-24,448 2,957 -21,491 -92 -21,583

-24,448 2,957 -385 38,911 -20,757 -2,827 -23,584

-46,308 -46,308

3,000 3,000

-207 -36 -243

-51,734 1,135 47,896 -163,079 -24,324 2,360,288 3,396 2,363,684

-6,436 -1,399 -7,835

-68,972 -68,972 -20 -68,992

-2,257 -2,257 -2,257

10,319 10,319 10,319

5,457 164 5,621 -66 5,555

5,457 164 10,319 -71,229 -61,725 -1,485 -63,210

-46,308 -46,308

-46,277 1,299 58,215 -234,308 -24,324 2,252,255 1,911 2,254,166

116

General Information

1. Basis for the preparation of the consolidated financial statements Wienerberger AG, which is headquartered in Vienna, Austria, is the parent company of an international building materials

group whose business activities are classified into six segments according to management responsibilities: Clay Building

Materials Eastern Europe, Clay Building Materials Western Europe, Pipes & Pavers Eastern Europe, Pipes & Pavers Western

Europe, North America and Holding & Others. The address of Wienerberger AG is Wienerbergstrasse 11, 1100 Vienna, Austria.

The consolidated financial statements were prepared pursuant to § 245a of the Austrian Commercial Code and in

accordance with the International Financial Reporting Standards (IFRSs) and Interpretations of the International Financial

Reporting Interpretations Committee (IFRIC) that were valid as of the balance sheet date and had been adopted by the

European Union (EU). Wienerberger applied all International Financial Reporting Standards that were announced by the IASB

and required mandatory application in 2013. Independent auditors have examined the annual financial statements of all major

Austrian and foreign companies to confirm their agreement with International Financial Reporting Standards. The consolidated

financial statements were released for publication by the Managing Board of Wienerberger AG on February 24, 2013.

The annual financial statements were principally based on amortized acquisition and production costs, and prepared as of

the balance sheet date. An exception to this policy is the accounting treatment applied to financial instruments held for trading

(derivatives) and available-for-sale financial instruments, which are recorded at fair value. The income statement is prepared in

accordance with the cost of sales method; the reconciliation to the total cost method is provided in the notes.

The consolidated financial statements are presented in thousand euros, while some amounts in the risk report are reported

in million euros.

2. Consolidated companies The list of companies at the end of the notes provides an overview of the fully consolidated subsidiaries, joint ventures

included at equity, associates and investments that are not fully consolidated for materiality reasons. The following table shows

the changes in the consolidation range of the Wienerberger Group during the reporting year and comprises subsidiaries as well

as associates and joint ventures accounted for at equity:

Consolidated companies Full

consolidation Equity

consolidation

Balance on 31.12.2012 148 6

Included during reporting year for the first time 4 0

Merged/liquidated during reporting year -8 0

Divested during reporting year 0 -1

Balance on 31.12.2013 144 5

Thereof foreign companies 121 4

Thereof domestic companies 23 1

Notes to the Financial Statements

Wienerberger AG

Annual Report 2013

Financial Statements Notes to the Financial Statements

117

Subsidiaries

In addition to Wienerberger AG, the 2013 consolidated financial statements include 23 (2012: 24) Austrian and 121 (2012:

124) foreign subsidiaries in which Wienerberger AG is able to directly or indirectly govern financial and operating policies

through the majority of voting rights. Subsidiaries are fully consolidated as of the date control is obtained and deconsolidated

when control ceases to exist. Twelve subsidiaries were not consolidated in 2013 (2012: 16) because their influence on the

Group’s financial position and financial performance is immaterial.

Investments in associates and joint ventures

Five (2012: 6) investments held by Wienerberger under joint control or over which Wienerberger exercises significant

influence are included in the consolidated financial statements at equity. The following table shows the proportional values

resulting from the aggregation of associates and joint ventures (above all the Tondach Group and Schlagmann), whereby the

prior year includes the proportional share of Pipelife Group results for the first five months.

in TEUR 2013 2012

Revenues 110,809 288,276

Operating EBITDA 15,761 30,918

Operating EBIT 4,895 12,423

Profit after tax -2,553 4,539

Assets Equity and Liabilities

in TEUR 31.12.2013 31.12.2012 in TEUR 31.12.2013 31.12.2012

Non-current assets 93,544 104,288 Equity 22,443 30,026

Current assets 46,132 49,924 Non-current provisions and liabilities 50,694 54,676

Current provisions and liabilities 66,539 69,510

139,676 154,212 139,676 154,212

Acquisitions and disposals

No companies were acquired during the reporting year. Bockhorner Rohstoffgesellschaft mbH & Co. KG, Bockhorner

Rohstoff Verwaltungs GmbH and KORAMIC Verwaltungs-GmbH, which were previously reported under other investments,

were initially consolidated as of January 1, 2013.

In June 2013, the associate Soltech NV was sold at the carrying amount and Tongrube Lobenfeld GmbH, a non-

consolidated company, was sold at a slight loss of TEUR 29.

118

3. Basis of consolidation The acquisition method of accounting is applied to all companies included through full consolidation. Under this method,

the compensation transferred in exchange for the investment is compared with the revalued net assets (shareholders’ equity)

on the date of purchase. All identifiable assets, liabilities and contingent liabilities are initially recognized at fair value in

accordance with IFRS 3; any remaining positive difference between the purchase price and revalued equity is recognized in

local currency as goodwill in the relevant segment. Negative differences are recognized to the income statement under other

operating income. Goodwill and the cash-generating unit to which it is allocated are tested for impairment at least once each

year and reduced to the lower applicable recoverable amount in the event of impairment. Impairment tests are also performed

more frequently if there are indications of a lasting decline in the value of a cash-generating unit (see note 4. Significant

accounting policies and note 19. Non-current assets).

All revenues, income and expenses as well as receivables and liabilities arising between subsidiaries are eliminated. Inter-

company gains and losses on the sale of goods or services between Group companies that affect current or non-current assets

are eliminated unless they are immaterial.

The basic methodology of consolidation applies to associates and joint ventures consolidated at equity, whereby local

valuation methods are retained if the variances are immaterial.

4. Significant accounting policies The accounting policies that form the basis for these consolidated financial statements remain unchanged in comparison

with the prior year and were expanded to include the new IFRSs that require mandatory application for 2013 (see note 6.

Effects of new and revised standards). A detailed description of the accounting policies can be found beginning on page 156.

5. Assumptions and estimates In preparing the consolidated financial statements, management must estimate certain figures and make assumptions that

influence the recognition and measurement of assets and liabilities, the disclosure of other obligations as of the balance sheet

date, and the recognition of revenues and expenses during the reporting period. The actual figures that become known at a

later date may differ from these estimates.

The valuation of pension plans and severance claims by actuaries include assumptions concerning the expected discount

rate, increase in salaries and pensions, employee turnover rates and the development of the costs for medical care. Determining

the useful life of property, plant and equipment involves the use of estimates that are derived from the operation of

comparable equipment. The provisions for site restoration are based on the best possible estimate of the expected costs to

restore clay pits as well as a long-term discount rate.

The measurement of deferred tax assets requires assumptions for the estimation of future taxable income and the timing

for the realization of the deferred tax assets. However, the valuation of deferred taxes is connected with uncertainty because

the future development of business cannot be predicted with certainty and cannot be influenced completely by the

Wienerberger Group.

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119

In particular, the impairment testing of goodwill and other assets involves estimates and forward-looking assumptions by

management concerning the expected cash surpluses and the cost of capital for the Wienerberger Group and its cash-

generating units during the planning period. The estimates made during the preparation of these consolidated financial

statements reflect the best knowledge and belief of management in accordance with the going concern principle. They are

based on experience and incorporate the remaining uncertainty in an appropriate form. A sensitivity analysis was performed to

show the influence of changes in macroeconomic parameters on forecasts for the income statement. This analysis is explained

in detail under note 19. Non-current assets.

6. Effects of new and revised standards The following table provides an overview of the new standards and interpretations that were adopted by the EU as of the

balance sheet date.

Standards/ Interpretations

Published by IASB

Latest application for Wienerberger

IFRS 13 Fair Value Measurement May 2011 1.1.2013

IAS 19 Employee Benefits (2011) June 2011 1.1.2013

IAS 1 Presentation of Items of Other Comprehensive Income June 2011 1.1.2013

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine October 2011 1.1.2013

IFRS 7 Financial instruments: Disclosures – Offsetting of Financial Assets and Liabilities December 2011 1.1.2013

IAS 32 Offsetting Financial Assets and Financial Liabilities December 2011 1.1.2013

Annual Improvements to IFRSs 2009 – 2011 May 2012 1.1.2013

IAS 27 Separate Financial Statements (2011) May 2011 1.1.2014

IAS 28 Investments in Associates and Joint Ventures (2011) May 2011 1.1.2014

IFRS 10 Consolidated Financial Statements May 2011 1.1.2014

IFRS 11 Joint Arrangements May 2011 1.1.2014

IFRS 12 Disclosures of Interests in Other Entities May 2011 1.1.2014

IFRS 10 Consolidated Financial Statements: Transition Guidance June 2012 1.1.2014

IFRS 11 Joint Arrangements: Transition Guidance June 2012 1.1.2014

IFRS 12 Disclosure of Interests in Other Entities: Transition Guidance June 2012 1.1.2014

IFRS 10 Consolidated Financial Statements: Investment Entities October 2012 1.1.2014

IFRS 12 Disclosure of Interests in Other Entities: Investment Entities October 2012 1.1.2014

IAS 27 Separate Financial Statements (2011): Investment Entities October 2012 1.1.2014

IAS 36 Recoverable Amount Disclosures for Non-Financial Assets May 2013 1.1.2014

IAS 39 Novation of Derivatives and Continuation of Hedge Accounting June 2013 1.1.2014

The changes to IAS 19 Employee Benefits (June 2011), which require mandatory application beginning with the 2013

financial year, were applied prematurely in 2012.

120

The consolidated financial statements were not affected by the mandatory application in 2013 of the changes to IAS 32

and IFRS 7 on the offsetting of financial assets and liabilities and the related disclosures in the notes or by the clarification to

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine since these standards were previously applied by the

Wienerberger Group.

The changes to IAS 1 involving the presentation of other comprehensive income were reflected on the statement of

comprehensive income by inserting subtotals for the items that will be reclassified to the income statement and for items that

will not be reclassified to the income statement.

IFRS 13 Fair Value Measurement requires mandatory application beginning with the 2013 financial year and was applied

by Wienerberger in 2013. The application of uniform rules to the determination of fair value had no material effect on the

measurement of assets or liabilities in the consolidated financial statements. The required disclosures in the notes are included

in notes 29 – 31 on financial instruments. Information on the fair values of non-financial assets and investment property is

provided under note 19.

The new consolidation standards IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements and IFRS 12

Disclosures of Interests in Other Entities were adopted by the EU on December 11, 2012 and require mandatory retrospective

application as of January 1, 2014. The premature application of these standards also requires the concurrent application of

IAS 27 Separate Financial Statements (2011) and IAS 28 Investments in Associates and Joint Ventures (2011). One major

effect is the change in the accounting treatment of joint ventures under IFRS 11, which generally requires the presentation of

proportionately consolidated companies at equity. Since Wienerberger changed the consolidation method applied to the

Schlagmann und Tondach joint ventures to the equity method in 2012, the application of the new consolidation standards will

have no major effect on the consolidated financial statements.

Wienerberger AG

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121

7. Operating segments The definition of business segments and the presentation of segment results are based on the management approach

prescribed in IFRS 8, and follow internal reports to the Managing Board of Wienerberger AG as the chief operating decision

maker who decides on the allocation of resources to the individual segments.

The full takeover of Pipelife, which was finalized at the end of May 2012, led to a change in the definition of operating

segments for reporting purposes to reflect the new assignment of management responsibilities. The business activities of the

Wienerberger Group are still managed on a regional basis, whereby the new segmentation also reflects the different business

areas. The Clay Building Materials Europe Division covers activities in the areas of clay blocks, facing bricks and roof tiles in

two segments: Clay Building Materials Eastern Europe and Clay Building Materials Western Europe. The Pipes & Pavers Europe

Division contains the activities of the plastic pipe producer Pipelife, the ceramic pipe producer Steinzeug-Keramo and the

concrete paver producer Semmelrock, and includes the Pipes & Pavers Western Europe and Pipes & Pavers Eastern Europe

Segments. Activities in North America are reported together under the North America Segment. The Holding & Others

Segment consists primarily of Wienerberger’s brick business in India and activities at the corporate headquarters.

Reports to the responsible chief operating decision maker include operating EBITDA as the key indicator for the

management of the business segments as well as revenues, EBIT, financial results and profit after tax. Accordingly, these

indicators are also presented in the segment report. The allocation of revenues, operating EBITDA, EBIT, financial results,

income taxes, profit after tax, assets, liabilities, capital employed and capital expenditure is based on the headquarters of the

individual companies.

The reconciliation of segment results to Group results only includes the elimination of revenues, income and expenses as

well as receivables and liabilities arising between the operating segments. Wienerberger does not generate more than 10% of

revenues with any single external customer.

Consolidated revenues rose by 13% to TEUR 2,662,943 in 2013. An adjustment for changes in the consolidation range

and currency translation effects resulted in an organic revenue decline of TEUR 4,543. Revenues were reduced by currency

translation effects of TEUR 35,807, but increased by TEUR 347,744 from changes in the consolidation range. Group revenues

include TEUR 41,270 (2012: TEUR 20,145) of revenues from construction orders. Detailed information on revenues by region

is provided in the presentation of operating segments on pages 122 and 123.

122

Operating Segments Clay Building Materials

Eastern Europe Clay Building Materials

Western Europe Pipes & Pavers Eastern Europe

in TEUR 2013 2012 2013 2012 2013 2012

Third party revenues 312,434 314,211 1,089,936 1,129,633 436,708 318,984 Inter-company revenues 1) 5,861 4,582 9,498 7,561 11,729 6,044 Total revenues 318,295 318,793 1,099,434 1,137,194 448,437 325,028 Operating EBITDA 2) 40,192 46,991 131,125 136,472 35,055 23,309 Depreciation and amortization 39,502 42,403 96,771 104,723 22,177 19,628 Restructuring costs and impairment charges to property, plant and equipment 0 3,291 0 38,578 0 1,114 Impairment charges to goodwill 0 9,566 0 202 0 0 Release of a provision for an impending antitrust penalty 0 0 9,387 0 0 0 EBIT 690 -8,269 43,741 -7,031 12,878 2,567 Income from investments in associates and joint ventures -5,935 -2,877 3,382 1,636 0 0 Investments in associates and joint ventures 13,169 22,208 11,285 10,831 0 0 Interest result -9,665 -11,634 -38,850 -16,738 -7,922 -8,951 Income taxes 4,592 -3,927 -2,180 13,194 365 -219 Profit/loss after tax -11,286 -27,126 6,380 -19,725 4,223 -6,396 Liabilities 247,184 274,334 1,217,731 1,318,352 214,451 233,467 Capital employed 419,216 468,961 1,357,130 1,426,159 255,995 266,148 Assets 609,216 664,051 1,895,774 2,382,088 398,815 419,040 Normal capex 17,104 14,125 44,487 48,649 4,625 5,049 Growth capex 3) 0 244 76 2,409 0 7,540 Ø Employees 2,383 2,516 5,940 6,227 2,267 1,440

Products Revenues Operating EBITDA 2) Capital employedin TEUR 2013 2012 2013 2012 2013 2012

Wall 4) 606,635 627,666 70,025 60,931 812,743 848,441 Facade 574,158 574,363 42,416 47,937 870,844 965,115 Roof 398,026 414,577 83,285 95,102 531,338 549,666 Pavers 110,599 121,285 10,930 6,030 123,923 141,528 Pipes 972,623 617,283 95,908 64,142 442,797 445,096 Other 902 375 -36,041 -28,596 -13,998 -18,552

Wienerberger Group 2,662,943 2,355,549 266,523 245,546 2,767,647 2,931,294

Revenues Clay Building Materials

Eastern Europe Clay Building Materials

Western Europe Pipes & Pavers Eastern Europe

in TEUR 2013 2012 2013 2012 2013 2012

Austria 46,185 48,920 133,362 98,249 Czech Republic 38,585 41,574 29,720 21,420 Poland 98,683 104,343 84,677 72,484 Russia 47,166 38,142 32,903 23,564 Germany 250,232 257,113 Switzerland 66,681 73,713 Belgium 215,641 223,012 Netherlands 138,010 159,330 France 155,436 162,016 Great Britain 183,051 160,663 Sweden 6,643 6,947 Norway 10,139 13,806 Finland 12,678 13,096 USA Other 82,033 81,507 51,840 60,881 156,046 103,267 Wienerberger Group 312,652 314,486 1,090,351 1,130,577 436,708 318,984

1) Inter-company revenues represent the revenues between fully consolidated, at-equity consolidated and unconsolidated Group companies. 2) Adjusted for restructuring costs and income from the release of a provision for an impending antitrust penalty

Wienerberger AG

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123

Pipes & Pavers Western Europe North America

Holding & Others Reconciliation 5) Wienerberger Group

2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

592,782 392,164 224,699 193,774 5,589 5,393 0 0 2,662,148 2,354,159 14,494 4,269 1,243 100 9,123 8,713 -51,153 -29,879 795 1,390

607,276 396,433 225,942 193,874 14,712 14,106 -51,153 -29,879 2,662,943 2,355,549 65,241 44,090 13,158 9,781 -18,248 -15,097 0 0 266,523 245,546 25,980 16,145 22,440 24,466 4,372 7,148 0 0 211,242 214,513

0 0 0 0 0 0 0 0 0 42,983 0 0 0 0 0 0 0 0 0 9,768

0 0 0 0 0 0 0 0 9,387 0

39,261 27,945 -9,282 -14,685 -22,620 -22,245 0 0 64,668 -21,718

0 5,780 0 0 0 0 0 0 -2,553 4,539 0 0 0 0 0 0 0 0 24,454 33,039

-6,972 -4,369 -28,490 -28,430 35,906 19,431 0 0 -55,993 -50,691 -8,913 -3,894 -2,387 -1,920 3,773 -7,582 0 0 -4,750 -4,348 31,528 75,113 -41,063 -45,952 32,445 13,894 -30,062 -30,344 -7,835 -40,536

486,971 414,225 524,406 534,654 1,367,130 981,210 -2,100,679 -1,980,195 1,957,194 1,776,047 296,627 302,446 426,554 458,742 12,125 8,838 0 0 2,767,647 2,931,294 800,126 721,864 487,244 530,060 4,671,089 3,936,262 -4,650,904 -4,513,634 4,211,360 4,139,731

30,315 24,715 7,314 8,704 2,159 4,076 0 0 106,004 105,318 0 146,637 0 6,586 642 0 0 0 718 163,416

1,780 1,604 1,213 1,064 204 209 0 0 13,787 13,060

Total investments 2013 2012

32,882 36,194 21,952 31,039 14,612 15,979

4,643 12,589 30,315 171,352

2,318 1,581 106,722 268,734

Pipes & Pavers Western Europe North America Holding & Others Wienerberger Group

2013 2012 2013 2012 2013 2012 2013 2012

257 102 295 290 180,099 147,561 68,305 62,994 183,360 176,827 80,069 61,706

50,253 44,416 300,485 301,529 66,681 73,713

76,437 73,916 292,078 296,928 100,924 52,205 238,934 211,535

79,693 45,556 235,129 207,572 7,575 3,928 190,626 164,591

78,042 45,843 84,685 52,790 110,448 64,599 120,587 78,405

39,508 24,591 52,186 37,687 199,137 164,302 199,137 164,302

49,645 37,008 25,562 29,472 5,456 5,274 370,582 317,409

592,782 392,164 224,699 193,774 5,751 5,564 2,662,943 2,355,549

3) Including investments in other financial assets 4) India is assigned to the Holding & Others Segment, but reported under the wall product segment. 5) The ‘reconciliation’ column includes eliminations between Group companies.

124

Notes to the Income Statement

8. Material expenses The cost of goods sold, selling and administrative expenses and other operating expenses include expenses for materials,

maintenance, merchandise and energy totaling:

in TEUR 2013 2012

Cost of materials 542,168 422,041

Maintenance expenses 107,420 99,111

Cost of merchandise 312,097 246,087

Cost of energy 278,158 284,526

Total 1,239,843 1,051,765

The reported expenses were increased by a change of TEUR 34,713 in inventories of semi-finished and finished goods

(2012: TEUR 35,528). This was contrasted by income of TEUR 1,485 (2012: TEUR 1,364) from the capitalization of own

work and a proportional share of borrowing costs, including foreign exchange differences, related to the construction of

qualified plant and equipment.

The cost of materials consists mainly of expenses for clay, sand, plastics, sawdust and other additives, pallets and other

packaging materials. Maintenance expenses involve the use of maintenance materials, other low-value spare parts and third

party services.

9. Depreciation, amortization and impairment of assets The cost of goods sold, selling and administrative expenses and other operating expenses for the reporting year include

TEUR 197,961 of scheduled depreciation and amortization (2012: TEUR 194,663). Impairment charges to property, plant and

equipment and intangible assets totaled TEUR 13,281 for the reporting year (2012: TEUR 19,850) and comprise special write-

downs for the mothballing of plants in prior periods as well as impairment charges to real estate and other assets.

in TEUR 2013 2012

Depreciation of property, plant and equipment and amortization of intangible assets 197,961 194,663

Impairment charges to goodwill 0 9,768

Impairment charges to property, plant and equipment 13,281 19,850

Impairment charges due to restructuring 0 14,223

Impairment charges 13,281 43,841

Depreciation, amortization and impairment charges to goodwill, other intangible assets and

property, plant and equipment 211,242 238,504

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125

10. Personnel expenses The cost of goods sold, selling and administrative expenses include the following personnel expenses:

in TEUR 2013 2012

Wages 257,954 234,158

Salaries 235,095 213,290

Leased personnel (permanently) 7,219 9,572

Expenses for long term incentive programs 2,884 0

Expenses for severance payments 3,708 4,492

Expenses for pensions 12,822 8,512

Expenses for mandatory social security and payroll-related taxes and contributions 105,723 107,944

Other employee benefits 11,947 14,535

Personnel expenses 637,352 592,503

The remuneration for the members of the Managing Board totaled TEUR 3,184 in 2013 (2012: TEUR 1,667). Of this

amount, TEUR 1,220 (2012: TEUR 1,667) represent fixed components and TEUR 1,964 (2012: TEUR 0) variable components.

Included here are expenses of TEUR 1,220 (2012: TEUR 0) for a long-term remuneration component, which will be paid out

in three equal instalments over three years if the defined targets are met. For the active members of the Managing Board,

pension expenses in the form of contributions to pension funds (defined contribution plans) totaled TEUR 502 in 2013 (2012:

TEUR 1,190). A provision of TEUR 181 (2012: TEUR 399) was created for severance compensation claims. Payments of

TEUR 836 (2012: TEUR 816) were made to former members of the Managing Board and their surviving dependents.

The members of the Supervisory Board received remuneration of TEUR 452 in 2013 for their activities during the 2012

financial year (2012: TEUR 501).

The company has not provided any guarantees for loans, and no companies in the Wienerberger Group have granted loans

to the members of the Managing Board or Supervisory Board.

11. Employees The average number of employees in 2013 and 2012 is shown on the following table:

2013 2012

Production 9,185 8,673

Administration 1,241 1,142

Sales 3,361 3,245

Total 13,787 13,060

Thereof apprentices 98 95

126

12. Other operating expenses The cost of goods sold, selling and administrative expenses include the following other operating expenses:

in TEUR 2013 2012

Non-income based taxes 22,940 23,659

Loss on the disposal of fixed assets, excluding financial assets 535 946

Transportation costs for customer deliveries 168,089 149,181

Internal transport 52,170 53,241

Environmental protection measures 6,364 4,583

Uncollectible receivables 2,018 4,175

Services 108,885 101,449

Rental and leasing charges 37,601 39,593

Miscellaneous 144,435 115,691

Other operating expenses 543,037 492,518

A reconciliation of expenses under the total cost method to expenses under the cost of sales method is provided on

page 127.

The cost of services is comprised primarily of expenses for business trips and travel, legal advising and miscellaneous

consulting, advertising, insurance and telecommunications. Expenses for the auditor and members of the auditor’s network

totaled TEUR 1,831 for the audit of the consolidated financial statements in 2013 (2012: TEUR 1,999), TEUR 124 (2012:

TEUR 48) for assurance services and TEUR 406 (2012: TEUR 468) for other services.

Miscellaneous other expenses consist mainly of commissions, patent and trademark rights, business entertainment,

customer claims and research and development. Research expenses amounted to TEUR 11,361 for the reporting year (2012:

TEUR 9,008).

13. Other operating income The cost of goods sold, selling and administrative expenses include the following other operating income:

in TEUR 2013 2012

Income from the disposal of tangible assets, excluding financial assets 16,424 12,230

Income from rental and leasing contracts 4,897 4,465

Subsidies 1,553 2,127

Insurance compensation 7,321 508

Miscellaneous 26,845 41,617

Other operating income 57,040 60,947

Miscellaneous other operating income represents sales-like revenues that are not part of the direct business activities of

the Wienerberger Group. The remaining amount represents a provision that was created in 2008 for an impending antitrust

penalty in Germany. This provision was released following the termination of the proceedings and is shown separately on the

income statement (TEUR 9,387).

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127

14. Reconciliation of results according to the cost of sales and total cost method In the income statement prepared according to the cost of sales method, expenses are classified by functional area. Under

the total cost method, the amounts for each individual category of expenses are shown and then adjusted to reflect the increase

or decrease in finished and semi-finished goods in order to present the expenses related to the actual volume of goods sold. The

relationship of these two methods is explained below, whereby changes in inventories and the capitalization of costs relating to

the construction of qualified fixed assets are included under the cost of materials:

2013 in TEUR

Cost of freight

Cost of materials

Cost of merchandise Depreciation

Cost of energy

Personnel expenses

Other income

Other expenses Total

Cost of goods sold 0 664,400 311,134 153,748 269,560 367,374 -6,768 127,914 1,887,362

Selling expenses 168,685 18,416 963 7,061 5,127 170,638 -3,594 155,585 522,881

Administrative expenses 0 0 0 9,181 1,226 99,340 -3,194 54,802 161,355

Other operating expenses 0 0 0 41,252 2,245 0 0 36,051 79,548

Other operating income 0 0 0 0 0 0 -43,484 0 -43,484

168,685 682,816 312,097 211,242 278,158 637,352 -57,040 374,352 2,607,662

2012 in TEUR

Cost of freight

Cost of materials

Cost of merchandise Depreciation

Cost of energy

Personnel expenses

Other income

Other expenses Total

Cost of goods sold 0 538,224 245,188 152,485 275,281 336,487 -4,681 118,001 1,660,985

Selling expenses 149,803 17,092 899 6,757 5,148 167,026 -3,347 143,259 486,637

Administrative expenses 0 0 0 8,207 1,014 88,990 -1,126 47,824 144,909

Other operating expenses 0 0 0 47,064 3,083 0 0 33,631 83,778

Other operating income 0 0 0 0 0 0 -51,793 0 -51,793

149,803 555,316 246,087 214,513 284,526 592,503 -60,947 342,715 2,324,516

128

15. Interest and other financial results In accordance with the categories defined by IAS 39, interest and other financial results comprise the following items:

2013 in TEUR Total

Loans and receivables FLAC 1) AfS 2) Derivatives

Interest and similar income 7,817 5,909 0 1,276 632

Interest and similar expense -63,810 0 -61,749 0 -2,061

Interest result -55,993 5,909 -61,749 1,276 -1,429

Income from third parties (dividends) 131 0 0 131 0

Income from subsidiaries 131 0 0 131 0

Result from the disposal of financial instruments -438 0 -200 -238 0

Valuation of fair value hedges -1,699 -1,699

Impairment of financial instruments -914 -827 0 -87 0

Foreign exchange differences -3,622

Net result -6,673 -827 -200 -325 -1,699

Banking fees -2,665

Other financial results -9,207 -827 -200 -194 -1,699

Total -65,200 5,082 -61,949 1,082 -3,128

2012 in TEUR Total

Loans and receivables FLAC 1) AfS 2) Derivatives

Interest and similar income 10,664 7,974 0 1,451 1,239

Interest and similar expense -61,355 0 -59,157 0 -2,198

Interest result -50,691 7,974 -59,157 1,451 -959

Income from third parties (dividends) 131 0 0 131 0

Income from subsidiaries 131 0 0 131 0

Result from the disposal of financial instruments 110 0 0 110 0

Income from the disposal of joint ventures 42,303

Valuation of fair value hedges 3,477 3,477

Impairment of financial instruments -9,900 -6,970 0 -2,930 0

Foreign exchange differences -1,981

Net result 34,009 -6,970 0 -2,820 3,477

Banking fees -2,458

Other financial results 31,682 -6,970 0 -2,689 3,477

Total -19,009 1,004 -59,157 -1,238 2,518

1) Financial liabilities at amortized cost 2) Available-for-sale financial instruments

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129

Interest expense includes the expected net interest result of TEUR 4,395 (2012: TEUR 3,458) from defined benefit

pension plans and similar obligations to employees (see note 25. Employee benefits). The sale of available-for-sale financial

instruments during the reporting year generated TEUR -238 (2012: TEUR 110). In the prior year, the purchase of the

remaining 50% stake in Pipelife and the resulting adjustment of the consolidation range led to a net valuation effect of

TEUR 42,303 in the original at-equity investment. Loans and receivables include impairment charges of TEUR 827 (2012:

TEUR 6,970) to receivables from associates. Available-for-sale financial instruments also include impairment charges of

TEUR 87 (2012: TEUR 2,930) that were recognized to profit or loss and resulted from lasting impairment. The loss resulting

from the repurchase of bonds is reported under financial liabilities at amortized cost and amounted to TEUR 200 (2012:

TEUR 0). The market valuation of fair value hedges resulted in a negative contribution of TEUR -1,699 (2012: TEUR 3,477)

to net profit.

16. Income taxes This item includes income taxes paid and owed by Group companies as well as provisions for deferred taxes.

in TEUR 2013 2012

Current tax expense 11,858 13,839

Deferred tax income -7,108 -9,491

Income taxes 4,750 4,348

The difference between the applicable Austrian corporate tax rate of 25% (2012: 25%) and the Group tax rate shown in

these statements is due to the following factors:

in TEUR 2013 2012


Tax expense at tax rate of 25% 771 9,047

Other foreign tax rates 4,932 6,741

Tax income and expense from prior periods 2,865 -2,717

Effect of tax free income from investments in associates and joint ventures -410 1,203

Change in valuation allowance for deferred tax assets -12,400 -30,181

Non-temporary differences -4,379 11,255

Changes in tax rates 3,871 304

Effective tax expense -4,750 -4,348

Effective tax rate in % -154.0 -12.0

130

17. Earnings per share, recommendation for the distribution of profit/loss The number of shares issued totaled 117,526,764 as of December 31, 2013. Wienerberger held 2,464,138 shares as

treasury stock as of this same date (2012: 2,464,138). The calculation of earnings per share for 2013 was based on a weighted

average of 115,062,626 shares outstanding, and reflects the deduction of treasury shares.

Number of shares 2013 2012

Outstanding 117,526,764 117,526,764

Treasury stock 2,464,138 2,464,138

Weighted average 115,062,626 115,062,626

Earnings per share of EUR -0.34 were calculated by dividing the results of the parent company by the weighted average

number of shares outstanding. Diluted earnings per share of EUR -0.34 represent basic earnings per share for 2013.

In accordance with the provisions of the Austrian Stock Corporation Act, the financial statements of Wienerberger AG as

of December 31, 2013 form the basis for the dividend payment.

These financial statements show net profit of EUR 18,793,934.15. The Managing Board will ask the Annual General

Meeting to approve a dividend payment of EUR 0.12 per share, for a total payment of EUR 14,103,211.68 on issued capital of

EUR 117,526,764, less a proportional amount of EUR 295,696.56 for treasury stock, or a total distribution of

EUR 13,807,515.12. The Managing Board also recommends that the Annual General Meeting approve the carryforward of the

remaining EUR 4,986,419.03.

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131

Notes to the Statement of Comprehensive Income

The statement of comprehensive income provides a reconciliation of profit after tax to comprehensive income as defined

in IAS 1. The reconciliation items consist primarily of foreign exchange adjustments, actuarial gains and losses from the

measurement of defined benefit pension plans and other long-term employee benefits, the change in the hedging reserve and

the results from the valuation of available-for-sale securities. The components of comprehensive income are presented after tax.

Currency translation differences of TEUR -71,249 (2012: TEUR 38,920) were generated primarily by the US dollar,

Russian ruble and Norwegian krone. No currency translation differences were reclassified to the income statement in 2013

(2012: TEUR -7,464).

Gains of TEUR 164 on the sale of available-for-sale financial assets were recorded under other comprehensive income

without recognition through profit or loss in 2013 (2012: TEUR 2,957). The market valuation of hedges of net investments in

foreign operations and cash flow hedges increased the hedging reserves by a total of TEUR 10,319 after tax (2012: TEUR -385).

Market value changes of TEUR 119 in available-for-sale financial instruments were reclassified from other comprehensive

income to the income statement during the reporting year (2012: TEUR 0).

Based on the after-tax loss of TEUR 7,835 recorded in 2013 (2012: TEUR -40,536), total comprehensive income after tax

led to a decrease of TEUR 63,210 in equity (2012: TEUR -23,584).

Deferred tax liabilities of TEUR 267 (2012: TEUR 4,086) were recognized under other comprehensive income for

actuarial gains and losses arising from the valuation of defined benefit pension plans and other similar post-employment

benefits (IAS 19). Tax effects were not calculated on the other components of comprehensive income, e.g. for the fair value

measurement of available-for-sale financial instruments and changes resulting from hedges. These transactions only involve

Wienerberger AG and Wienerberger Finanzservice GmbH, which are headquartered in Vienna, and presently have an effective

tax rate of 0% due to tax loss carryforwards from prior periods.

132

Notes to the Cash Flow Statement

The cash flow statement for the Wienerberger Group shows the changes in cash and cash equivalents resulting from the

inflow and outflow of funds during the reporting year. Cash and cash equivalents (liquid funds) include cash on hand and

deposits with banks. Securities and current liabilities owed to financial institutions are not part of cash and cash equivalents.

The effects of company acquisitions are eliminated and shown separately under net payments made for the acquisition of

companies. Data from foreign Group companies are generally translated at the average exchange rate for the year. In contrast to

this practice, cash and cash equivalents are valued at the exchange rate in effect on the balance sheet date.

18. Cash flow from investing activities The acquisition of property, plant and equipment and intangible assets resulted in an outflow of funds totaling

TEUR 106,619 (2012: TEUR 121,955). This amount includes TEUR 106,004 (2012: TEUR 105,318) of normal capex,

maintenance and investments in technical upgrades. A total of TEUR 615 (2012: TEUR 163,416) was spent on acquisitions,

plant expansion and environmental investments. Investments of TEUR 103 (2012: TEUR 0) were made in financial assets.

Cash inflows from the disposal of fixed and financial assets amounted to TEUR 19,930 (2012: TEUR 21,467) and include

the disposal of property, plant and equipment and intangible assets as well as the sale of financial assets. These disposals

generated net gains of TEUR 15,861 (2012: TEUR 11,110). In addition, land was sold for a price of TEUR 8,696 in 2013. This

transaction is not included in cash inflows from the disposal of fixed and financial assets because the proceeds will be paid in

installments.

The reconciliation of total investments to normal capex and growth capex made by the Wienerberger Group is as follows:

in TEUR 2013 2012

Payments made for investments in tangible and intangible assets 106,619 121,955

Net payments made for the acquisition of companies 0 146,779

Investments in financial assets 103 0

Total investments including financial assets 106,722 268,734

Maintenance and investments in technical upgrades 106,004 105,318

Normal capex 106,004 105,318

Payments made for plant expansions and environmental investments 615 16,637

Net payments made for the acquisition of companies 0 146,779

Growth capex 615 163,416

Investments in financial assets 103 0

Growth capex including financial assets 718 163,416

Wienerberger AG

Annual Report 2013


133

Notes to the Balance Sheet

19. Non-current assets The development of non-current assets is shown on pages 136 and 137. The figures shown for foreign exchange rate

increases and decreases represent amounts arising from the use of different exchange rates to translate the assets of foreign

companies at the beginning of the year and year-end.

Goodwill is distributed among the individual segments of business as follows:

in TEUR 2013 2012

Clay Building Materials Eastern Europe 42,999 44,020

Clay Building Materials Western Europe 358,496 363,479

Pipes & Pavers Eastern Europe 17,086 17,123

Pipes & Pavers Western Europe 45,329 46,930

North America 165,996 174,277

Holding & Others 988 1,137

Goodwill 630,894 646,966

In accordance with IFRS 3, goodwill is not amortized on a regular basis but tested at least once each year for indications of

impairment as defined in IAS 36. Wienerberger defines plants as cash-generating units. These plants are aggregated by divisions

and regions based on the new Group structure, which led to a reduction in the number of cash-generating units from 65 in the

prior year to 59 in 2013. The carrying amount of the goodwill and operating assets allocated to the respective units is

compared with the recoverable amount and, if necessary, written down to the lower value in use or to a possible sale price or

liquidation value. Since it is not practical to establish the fair value of an individual cash-generating unit, cash flows are

estimated for all units of the Wienerberger Group based on an income approach. These cash flows are discounted at the

weighted average cost of capital after tax (WACC) to develop the present value. For the determination of the value in use, the

after-tax WACC is derived from external sources on the basis of recognized financial methods.

The expected future cash surpluses are based on the latest internal forecasts prepared by top management and approved

by the Managing and Supervisory Boards for the period from 2014 to 2017 and explicitly exclude the earnings potential of

future strategic business developments. The quality of these forecasts is evaluated on a regular basis through a variance analysis

that compares the data with actual figures, and the results of the analysis are incorporated into the subsequent planning process.

The calculation is based on four detailed planning periods (2014 – 2017), whereby the surplus cash inflows in the following

fifth planning period are assumed to be sustainable over the long-term based on the going concern principle and form the basis

for determining the present value of the perpetual yield. These perpetual cash flows include a country-specific growth rate that

is derived from an external source (IMF, 2013, World Economic Outlook Database). Wienerberger tests its assets for

impairment at least once each year after the conclusion of the corporate planning process. If interim forecasts or analyses show

a possible negative variance from the original plan, the involved cash-generating unit is tested again for impairment. In such

cases, the impairment tests are recalculated on the basis of updated planning data and expanded to include stress tests.

The decisive factor for determining the value in use is formed by assumptions for the future development of the local

market, sales volumes and prices. Therefore, the value in use is determined on the basis of forecasts published by statistical

agencies (e.g. Euroconstruct) and the experience of management. Estimates for cost structures in the Wienerberger Group

reflect the extrapolation of values from past experience and also incorporate macroeconomic forecasts.

134

The impairment tests carried out in December 2013 based on the latest approved mid-term planning data for

2014 – 2017 did not result in any impairment charges to goodwill (2012: TEUR 9,768). The following after-tax costs of capital

and growth rates were used for these impairment tests:

WACC Growth rate

in % 2013 2012 2013 2012

Euro zone 6.99 6.84 1.7 1.0

USA 7.05 6.03 3.1 1.0

Great Britain 6.58 5.53 2.3 1.0

Russia 12.02 11.63 3.5 3.5

India 11.83 9.69 6.7 4.0

Turkey 11.80 8.77 4.5 3.0

Wienerberger Group 6.97 6.80 1.5 – 6.7 1.0 – 4.0

The value in use based on the above parameters amounted to TEUR 850,791 for Clay Building Materials Eastern Europe,

TEUR 2,124,451 for Clay Building Materials Western Europe, TEUR 643,326 for Pipes & Pavers Eastern Europe,

TEUR 831,122 for Pipes & Pavers Western Europe and TEUR 758,963 for North America.

In connection with the impairment testing process, the country budgets were subjected to stress tests that included

changes in individual macroeconomic parameters as part of a sensitivity analysis. The following table summarizes the results of

the stress tests and shows a risk of impairment to goodwill based on an increase in the WACC and lower growth rates.

Sensitivity impairment 2013 WACC

in TEUR +50 Basis points +25 Basis points Tested -25 Basis points -50 Basis points

Growth rate – tested -8,546 -73 0 0 0

Growth rate cut to half -132,783 -83,013 -43,451 -6,007 -673

Growth rate of zero -220,018 -177,652 -133,750 -90,851 -56,329

In the prior year, an increase of 100 basis points in the risk-free interest rate that forms the basis for the cost of capital

would have resulted in impairment of TEUR 39,310 and a parallel reduction of one-half in the growth rates would have

resulted in impairment of TEUR 92,007.

Miscellaneous non-current intangible assets are comprised primarily of acquired customer bases totaling TEUR 118,517

(2012: TEUR 130,395) and acquired trademark rights of TEUR 51,520 (2012: TEUR 52,915) as well as patents and

concessions. A total of TEUR 484 was capitalized for internally generated intangible assets in 2013 (2012: TEUR 414).

Non-current assets include land with a value of TEUR 374,725 (2012: TEUR 389,633). Borrowing costs and foreign

exchange differences capitalized up to the completion of new plant construction amounted to TEUR 268 (2012: TEUR 84).

Wienerberger AG

Annual Report 2013


135

The Wienerberger Group also uses finance leases, but only to a limited extent. All major finance leases have expired or

been terminated by the exercise of the related purchase options. The remaining carrying amounts totaled TEUR 632 as of

December 31, 2013 (2012: TEUR 10,110).

in TEUR 2013 2012

Acquisition costs 632 13,458

Depreciation (accumulated) 0 3,348

Carrying amount 632 10,110

Obligations arising from operating leases, license agreements and rental contracts for the use of property, plant and

equipment not shown on the balance sheet represent liabilities of:

in TEUR 2013 2012

For the following year 26,393 22,363

For the next two to five years 57,252 55,725

Over five years 28,314 34,241

Payments arising from operating leases, license and rental agreements totaled TEUR 37,601 (2012: TEUR 39,593).

The balance sheet item “investment property” includes real estate and buildings with a carrying amount of TEUR 78,377

(2012: TEUR 81,297), which are not used in current business operations. These assets are scheduled for sale over the medium-

to long-term and are therefore classified as investment property. The fair values of these assets based on comparable

transactions are allocated to level two in the valuation hierarchy according to IFRS 13 and estimated at TEUR 142,042 (2012:

TEUR 147,655). The investment properties generated rental and other income of TEUR 1,047 in 2013 (2012: TEUR 765).

Wienerberger sold investment property with a carrying amount of TEUR 10,265 during the reporting year (2012:

TEUR 7,107). Of the total non-current assets, equipment with a combined carrying amount of TEUR 3,651 (2012:

TEUR 3,184) and a fair value of TEUR 3,653 (2012: TEUR 2,668) is designated for sale; the majority of these items represent

land and buildings at plant locations that have been permanently closed. However, management does not expect to conclude

any sales within the next 12 months because of the generally unfavorable situation on the industrial property market. Therefore,

these assets were not classified as non-current assets held for sale and discontinued operations in accordance with IFRS 5.

136

Acquisition or Production Costs

in TEUR Balance on

1.1.2013

Change in consolidation

range

Foreign exchange incr./decr. Additions Disposals Transfers

Balance on 31.12.2013

Goodwill 807,606 -3,109 -16,864 0 0 0 787,633

Other intangible assets 304,443 0 -9,606 5,299 9,255 -839 290,042

Intangible assets and goodwill 1,112,049 -3,109 -26,470 5,299 9,255 -839 1,077,675

Land and buildings 1,218,949 250 -22,469 15,225 7,795 -6,921 1,197,239

Machinery and equipment 2,466,116 0 -46,919 46,407 71,703 25,647 2,419,548

Fixtures, fittings, tools and equipment 102,432 5 -2,363 7,930 8,894 304 99,414

Assets under construction 52,232 0 -1,673 34,658 340 -34,032 50,845

Property, plant and equipment 3,839,729 255 -73,424 104,220 88,732 -15,002 3,767,046

Investment property 174,600 0 -3,084 16 31,458 15,841 155,915

Investments in associates and joint ventures 29,478 0 -2,292 1 1,647 0 25,540

Investments in subsidiaries 606 -203 -1 100 352 0 150

Other investments 5,223 0 6 2 6 0 5,225

Other financial assets 5,829 -203 5 102 358 0 5,375

5,161,685 -3,057 -105,265 109,638 131,450 0 5,031,551

Acquisition or Production Costs

in TEUR Balance on 1.1.2012 1)


range

Foreign exchange incr./decr. Additions Disposals Transfers


Goodwill 764,150 42,175 1,280 0 0 1 807,606

Other intangible assets 122,736 178,222 3,950 3,146 3,690 79 304,443

Intangible assets and goodwill 886,886 220,397 5,230 3,146 3,690 80 1,112,049

Land and buildings 1,156,010 53,967 14,227 20,984 5,215 -21,024 1,218,949

Machinery and equipment 2,341,339 96,078 26,654 50,334 59,498 11,209 2,466,116

Fixtures, fittings, tools and equipment 91,773 7,478 1,111 7,779 6,513 804 102,432

Assets under construction 49,494 10,916 719 39,479 690 -47,686 52,232

Property, plant and equipment 3,638,616 168,439 42,711 118,576 71,916 -56,697 3,839,729

Investment property 132,458 2,922 2,317 233 19,947 56,617 174,600

Investments in associates and joint ventures 73,089 -44,097 486 0 0 0 29,478

Investments in subsidiaries 1,291 -685 0 0 0 0 606

Other investments 5,208 24 5 0 14 0 5,223

Other financial assets 6,499 -661 5 0 14 0 5,829

4,737,548 347,000 50,749 121,955 95,567 0 5,161,685

1) The data for 2011 were adjusted to reflect the premature application of IAS 19 Employee Benefits and the change to the equity method in 2012 for companies previously included through proportionate consolidation.

Note: Rounding differences may arise from the automatic processing of data.

Wienerberger AG

Annual Report 2013


137

Depreciation and Amortization

Balance on 1.1.2013


range

Foreign exchange incr./decr.

Depreciation/Amortization Impairments Write-ups Disposals Transfers


Carrying amount

31.12.2013

160,640 0 -3,901 0 0 0 0 0 156,739 630,894

69,349 0 -1,677 18,987 253 0 9,043 170 78,039 212,003

229,989 0 -5,578 18,987 253 0 9,043 170 234,778 842,897

426,693 83 -5,363 36,582 3,001 0 7,116 -4,094 449,786 747,453

1,538,880 0 -24,374 133,338 8,408 0 71,147 -24 1,585,081 834,467

70,763 5 -1,420 8,460 39 0 8,470 -486 68,891 30,523

326 0 -1 14 0 0 69 -265 5 50,840

2,036,662 88 -31,158 178,394 11,448 0 86,802 -4,869 2,103,763 1,663,283

93,303 0 -1,431 580 1,580 0 21,193 4,699 77,538 78,377

-3,561 0 -35 0 0 -3,161 -1,521 0 1,086 24,454

175 -162 0 0 0 0 0 0 13 137

4,325 0 6 0 87 0 0 0 4,418 807

4,500 -162 6 0 87 0 0 0 4,431 944

2,360,893 -74 -38,196 197,961 13,368 -3,161 115,517 0 2,421,596 2,609,955

Depreciation and Amortization

Balance on 1.1.2012 1)


range


Depreciation/Amortization Impairments Write-ups Disposals Transfers


Carrying amount

31.12.2012

150,953 0 -81 0 9,768 0 0 0 160,640 646,966

56,411 0 590 14,523 1,530 0 3,685 -20 69,349 235,094

207,364 0 509 14,523 11,298 0 3,685 -20 229,989 882,060

409,164 0 4,258 36,785 6,772 0 4,500 -25,786 426,693 792,256

1,434,568 0 15,680 133,830 24,937 145 58,264 -11,726 1,538,880 927,236

67,422 0 770 8,830 32 0 5,921 -370 70,763 31,669

285 0 -1 70 0 30 0 2 326 51,906

1,911,439 0 20,707 179,515 31,741 175 68,685 -37,880 2,036,662 1,803,067

65,301 0 1,515 625 802 0 12,840 37,900 93,303 81,297

-59,043 47,006 9 0 -450 4,124 -13,041 0 -3,561 33,039

175 0 0 0 0 0 0 0 175 431

941 0 4 0 3,380 0 0 0 4,325 898

1,116 0 4 0 3,380 0 0 0 4,500 1,329

2,126,177 47,006 22,744 194,663 46,771 4,299 72,169 0 2,360,893 2,800,792

138

20. Inventories in TEUR 2013 2012

Raw materials and consumables 114,973 120,210

Semi-finished goods 86,660 85,056

Finished goods and merchandise 463,370 492,898

Prepayments 1,023 2,761

Inventories 666,026 700,925

Palettes are included under raw materials and consumables. Clay purchased from third parties is shown together with clay

extracted from Group pits under semi-finished goods. Impairment losses of TEUR 10,895 (2012: TEUR 10,025) were

recognized to products in cases where the net realizable value (selling price less selling and administrative expenses) was less

than the acquisition or production cost. Inventories written down to net realizable value totaled TEUR 62,132 as of

December 31, 2013 (2012: TEUR 47,393).

21. Receivables, securities and other financial assets

Loans and receivables

2013 2012

in TEUR Total Remaining

term < 1 year Remaining

term > 1 year Total Remaining


term > 1 year

Trade receivables from third party 202,305 202,305 0 198,328 198,260 68

Trade receivables from subsidiaries 1,162 1,162 0 838 838 0

Trade receivables 203,467 203,467 0 199,166 199,098 68

Financial receivables from subsidiaries 27,760 27,760 0 22,270 22,270 0

Receivables arising from loans 4,584 3,583 1,001 4,464 3,447 1,017

Loans granted 32,344 31,343 1,001 26,734 25,717 1,017

Loans and receivables 235,811 234,810 1,001 225,900 224,815 1,085

Loans and receivables are carried at amortized cost, which is adjusted to reflect any necessary individual valuation

adjustments. Any necessary individual valuation adjustments to receivables and other assets are deducted directly from the

carrying amount. In 2013 individual valuation adjustments totaled TEUR 2,018 (2012: TEUR 4,175). Individual valuation

adjustments to receivables during the reporting year equaled 0.9% of trade receivables and originated loans as well as less than

1% of total receivables, and are therefore not shown separately. Sold receivables (factoring) are derecognized as required by

IAS 39. As of December 31, 2013, trade receivables totaling TEUR 85,007 (2012: TEUR 81,800) had been sold to third parties.

The receivables due from Group companies reflect loans granted to companies included in the consolidation at equity and

loans granted to other investments. Trade receivables totaling TEUR 2,185 (2012: TEUR 1,784) are secured by notes payable.

Wienerberger AG

Annual Report 2013


139

Available-for-sale financial instruments

2013 2012

Carrying amount

Market value

Market value

changes recog. to

equity Ø Effective

interest rateCarrying amount

Market value

Market value

changes recog. to

equity Ø Effective

interest rate

in TEUR in TEUR in TEUR in % in TEUR in TEUR in TEUR in %

Shares in funds 7,290 7,290 -98 0.71 7,432 7,432 122 0.69

Corporate bonds 19,470 19,470 262 6.83 21,828 21,828 2,835 6.43

Stock 6,452 6,452 0 - 6,452 6,452 0 -

Other 11,416 11,416 0 - 1,860 1,860 0 -

Available-for-sale financial instruments 44,628 44,628 164 37,570 37,570 2,957

In addition to the available-for-sale financial instruments included under securities and other financial assets, other non-

current financial assets include TEUR 944 (2012: TEUR 1,329) that are also assigned to this category. The resulting total of

available-for-sale financial instruments is TEUR 45,572 (2012: TEUR 38,899).

Financial instruments held for trading

2013 2012

in TEUR Carrying amount

Market value

Carrying amount

Market value

Derivatives from cash flow hedges 9,675 9,675 1,859 1,859

Derivatives from fair value hedges 0 0 6,287 6,287

Other derivatives 4,802 4,802 54 54

Derivatives with positive market value 14,477 14,477 8,200 8,200

The carrying amounts of securities and other financial assets totaled TEUR 91,449 (2012: TEUR 72,504). This amount

includes TEUR 32,344 (2012: TEUR 26,734) of loans granted, TEUR 44,628 (2012: TEUR 37,570) of available-for-sale

financial instruments and TEUR 14,477 (2012: TEUR 8,200) of derivatives with a positive market value.

22. Other receivables, prepaid expenses and deferred charges

2013 2012

in TEUR Total Remaining


term > 1 year Total Remaining


term > 1 year

Market value of plan assets in excess of pension obligations 61 61 0 0 0 0

Prepaid expenses and deferred charges 13,093 13,093 0 13,384 13,384 0

Receivables for current taxes 17,920 17,920 0 18,974 18,974 0

Miscellaneous receivables 66,066 58,393 7,673 52,208 51,457 751

Other receivables, prepaid expenses and deferred charges 97,140 89,467 7,673 84,566 83,815 751

140

Miscellaneous receivables consist primarily of receivables due from tax authorities and social security carriers. A receivable

of TEUR 5,925 from the sale of land has a medium term and is therefore reported as a non-current asset under other financial

assets and non-current receivables.

23. Capital and reserves The development of capital and reserves in 2013 and 2012 is shown on pages 114 and 115.

The Annual General Meeting of Wienerberger AG on May 14, 2009 approved the creation of authorized capital at an

amount equal to 50% of current share capital (which then equaled EUR 83,947,689). This approval covers an ordinary capital

increase in exchange for contributions in cash or in kind within a period of five years, contingent upon the consent of the

Supervisory Board. Share capital can be increased by a maximum of EUR 41,973,844 or 50% of share capital through the issue

of up to 41,973,844 new bearer or registered shares. This increase can also be carried out in multiple segments. This

authorization is valid up to May 13, 2014. The type of shares, the issue price and the issue conditions are to be determined by

the Managing Board and approved by the Supervisory Board. The legal subscription rights of shareholders are given, but the

Managing Board is authorized to exclude these subscription rights in two special cases with the approval of the Supervisory

Board: first, for contributions in kind for the granting of shares to acquire companies, segments of companies or investments in

companies; and second, for multiple allotments in connection with the placement of new shares by the company (greenshoe).

The Annual General Meeting on May 14, 2009 also authorized the Managing Board to issue convertible bonds in one or

more segments with the approval of the Supervisory Board. These bonds are to include subscription or exchange rights or

subscription or exchange obligations for up to 41,973,844 shares or 50% of the company’s share capital. The shares can be

drawn from conditional capital and/or from treasury shares. The issue price and terms are to be determined by the Managing

Board with the approval of the Supervisory Board. This authorization is valid up to May 13, 2014. It also authorizes the

Managing Board, contingent upon the approval of the Supervisory Board, to exclude the legal subscription rights of

shareholders. The Managing Board is also authorized to carry out a conditional capital increase for the issue of new shares to

the holders of the convertible bonds. Share capital can be increased by a maximum of EUR 41,973,844 by the issue of up to

41,973,844 new bearer or registered shares. Share capital may only be increased to the extent that the holders of the

convertible bonds utilize their subscription or exchange rights to shares in the company and in accordance with a decision by

the Managing Board to service the exercise of these rights with new shares. The exercise of subscription or exchange rights by

the holders of the convertible bonds may also be serviced by treasury shares. The number of new shares issued in connection

with the above-mentioned capital measures may not exceed 41,973,844 (50% of share capital in 2009).

The 140th Annual General Meeting also authorized the Managing Board, contingent upon the approval of the Supervisory

Board, to issue participation rights in one or more segments with a total nominal value of up to EUR 200,000,000 through the

issue of up to 200,000 participation certificates and to determine the terms of issue. This authorization is valid up to May 13,

2014.

Authorized capital totaled EUR 8,394,769 after the capital increase of 33,579,075 shares in 2009 (7% of share capital in

2013). This authorized capital may be increased through the issue of up to 8,394,769 new bearer or registered shares.

The 143rd Annual General Meeting of Wienerberger AG on May 11, 2012 authorized the Managing Board to repurchase

the company’s shares, up to the legally defined limit, during a period of 30 months beginning on the day the resolution was

passed. The price for these share purchases may not exceed twice the stock market quotation on May 11, 2012 and may not be

lower than € 1.00 per share. The Managing Board was also empowered, without obtaining further authorization from the

Annual General Meeting, to withdraw or resell these shares and to sell treasury shares in another manner than over the stock

Wienerberger AG

Annual Report 2013


141

exchange or through a public offer. This authorization replaced the authorization for the repurchase of treasury shares that was

granted by the Annual General Meeting on May 20, 2010.

Group equity totaled TEUR 2,254,166 as of December 31, 2013, compared to TEUR 2,363,684 in the previous year.

Equity was reduced during the reporting year by the decrease in retained earnings, the payment of the hybrid coupon and the

dividend, and negative foreign currency translation differences. Equity was increased by TEUR 15,874, after the deduction of

deferred taxes, by components of other comprehensive income such as the hedging reserve, the measurement of available-for-

sale financial instruments and actuarial gains and losses related to post-employment benefits as defined in IAS 19 (2011).

The share capital of Wienerberger AG totaled EUR 117,526,764 as of December 31, 2013 and is divided into

117,526,764 zero par value shares that all carry the same rights. All shares are fully paid in.

On February 11, 2013 Wienerberger AG paid the TEUR 32,500 annual coupon for the hybrid bond that was issued on

February 9, 2007 and is reported as hybrid capital in the balance sheet. This hybrid bond is subordinated to all other creditors,

and is a perpetual bond with a volume of TEUR 500,000 and a coupon of 6.5%, which can also be suspended if the dividend is

postponed. After ten years Wienerberger AG may call the hybrid bond or extend the term at a variable interest rate (3 month

EURIBOR +325 bps). This instrument meets the criteria defined by IAS 32 for classification as equity, and the coupons are

shown as part of the use of earnings on the changes in equity statement. In accordance with IAS 32, this data is presented after

tax. Wienerberger AG has an effective tax rate of 0% due to loss carryforwards from prior periods, and the distribution after tax

therefore equals TEUR 32,500. In 2013 the coupon interest reduced earnings per share by EUR 0.28.

Retained earnings of TEUR 803,254 (2012: TEUR 855,998) include the retained earnings of Wienerberger AG and the

retained earnings of subsidiaries not eliminated during the capital consolidation. Group results for 2013, excluding the share of

profit or loss due to non-controlling interests, are shown under retained earnings.

The translation reserve includes all differences from foreign currency translation that are recognized under other

comprehensive income, whereby the differences from companies accounted for at equity are shown separately. The hedging

reserve includes changes in the value of hedges that are reported under other comprehensive income. These instruments

comprise hedges of net investments in foreign operations (net investment hedges) as well as hedges for foreign currency

transactions (cash flow hedges).

Change of control clauses are included in the employment contracts with the members of the Managing Board, in the

terms of the 2010, 2011, 2012 and 2013 corporate bonds, in the 2007 hybrid bond and in the syndicated term loans and other

loans concluded in 2008 and 2012.

Free float is distributed among Austrian and international investors. The US firms Dodge & Cox Inc. (San Francisco) and

First Eagle Investment Management LLC (New York) as well as Black Creek Investment Management Inc. (Canada) each held

more than 5% of the company’s shares in 2013. The Wienerberger share is traded in the Prime Market Segment of the Vienna

Stock Exchange as well as an ADR Level 1 Program of the Bank of New York on the OTC market in the USA.

142

24. Provisions

in TEUR 1.1.2013



range Reversal Use Addition 31.12.2013

Provisions for warranties 13,255 -113 0 3,686 1,465 5,155 13,146

Provisions for site restoration 37,017 -1,303 55 3,091 2,824 4,799 34,653

Provisions for environmental measures 2,729 -35 0 55 296 757 3,100

Other non-current provisions 53,001 -1,451 55 6,832 4,585 10,711 50,899

Provisions for current taxes 7,032 0 0 3,792 144 459 3,555

Other current provisions 73,586 -384 0 23,381 24,532 28,552 53,841

Current provisions 80,618 -384 0 27,173 24,676 29,011 57,396

Provisions 133,619 -1,835 55 34,005 29,261 39,722 108,295

25. Employee benefits The obligations for employee benefits are as follows:

in TEUR 1.1.2013



range Reversal Use Addition 31.12.2013

Provisions for severance payments 24,412 -166 0 2,037 2,945 1,695 20,959

Provisions for pensions 101,902 -1,594 0 10,229 19,856 18,156 88,379

Provisions for service anniversary bonuses 5,963 -23 0 167 375 1,436 6,834

Employee-related provisions 132,277 -1,783 0 12,433 23,176 21,287 116,172

The obligations for post-employment benefits total TEUR 109,338 (2012: TEUR 126,314) and comprise pension

obligations of TEUR 88,379 (2012: TEUR 101,902) and severance compensation obligations of TEUR 20,959 (2012:

TEUR 24,412). The major actuarial parameters and relevant accounting principles are described on pages 160 and 161.

The company is exposed to various risks in connection with the plans for post-employment benefits. In addition to general

actuarial risks such as the longevity risk for pensions or interest rate risk, the company is also exposed to foreign exchange and

capital market risks.

Pension obligations

Wienerberger has made pension commitments to selected managers as well as employees in the Netherlands, Great Britain,

Scandinavia, the USA and Switzerland. Defined contribution plans represent the goal for future pension agreements. In 2004 a

number of defined benefit pension agreements with active managers were converted to defined contribution pension models

through the transfer of previously earned claims to a pension fund. Wienerberger has also made a number of defined pension

commitments mainly to former managers, which are not tied to plan assets; the length of service forms the basis for retirement

benefits under these plans. The employees of General Shale Inc. (USA) have a funded defined benefit pension plan as well as

non-funded health insurance. ZZ Wancor (Switzerland) has a defined benefit pension plan through an external pension fund,

whereby the company is de facto obliged to make additional contributions if the collective foundation should become

insolvent. Claims earned by Dutch employees are satisfied through a defined contribution pension plan, primarily through

contributions to an industry-wide pension fund in the Netherlands. In Great Britain a defined contribution pension plan covers

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143

all employees. The member companies of thebrickbusiness, which was acquired during 2004, had a defined benefit model up

to the end of 2003; a provision was created to reflect these obligations. The acquisition of Baggeridge in 2007 also led to the

takeover of a defined benefit pension plan. The employees of the Steinzeug-Keramo Group have three defined benefit pension

plans. The acquisition of the Pipelife Group in 2012 and the subsequent changes in the consolidation range added a further

nine defined benefit pension plans to the provision. The Irish plan was terminated in 2013, which generally explains the

settlement payments. The Pipelife Group now has eight defined benefit pension plans for individual members of management

in the Netherlands, Belgium, Norway, Austria, France, Germany and Bulgaria.

Total pension expenses for 2013 cover both defined contribution and defined benefit pension plans. The current and past

service cost and the effects of plan settlements are reported under operating results and the net interest effect under interest

result.

in TEUR 2013 2012

Defined contribution plans

Expenses for defined contribution pension plans 13,279 6,585

Defined benefit plans

Service costs for defined benefit pension plans 3,900 2,858

Past service cost -1,473 -479

Effects of plan curtailments and settlements -2,884 -452

Net interest cost 3,693 3,292

Expenses for defined benefit plans 3,236 5,219

Total expenses for pensions 16,515 11,804

The gross pension obligations can be reconciled with net obligations as shown on the balance sheet by deducting the fair

value of plan assets. Of the total net obligations, TEUR 9,992 (2012: TEUR 11,714) are related to the US (retirement) health

insurance program. A change in the cost trend for medical services would not have any major impact on the interest cost or the

defined benefit pension obligation.

144

The components of pension obligations and their coverage through plan assets are shown below:

Defined benefit obligations Fair value of plan assets

in TEUR 2013 2012 2013 2012

Value as of 1.1. 350,242 248,919 248,340 180,653

Changes in consolidation range 0 64,699 0 51,162

Foreign exchange increase/decrease -7,003 268 -5,415 677

Service costs for defined benefit pension plans 3,900 2,858 0 0

Interest cost 12,405 13,049 0 0

Expected income from plan assets 0 0 8,712 9,757

Effects of plan curtailments and settlements -2,884 -452 0 0

Actuarial gains/losses 8,094 43,939 14,394 16,080

Past service cost -1,473 -479 0 0

Payments to retirees -17,523 -15,398 -16,485 -15,398

Payments received from employees 1,785 1,754 1,785 1,754

Settlements -2,500 -8,915 -2,500 -5,213

Payments received from employers 0 0 7,894 8,868

Value as of 31.12. 345,043 350,242 256,725 248,340

Fair value of plan assets -256,725 -248,340

Present value of unfunded obligations 88,318 101,902

thereof: provision for pensions 88,379 101,902

thereof: market value of plan assets in excess of pension obligations 61 0

Actuarial gains/losses resulting from pension plans

Actuarial gains/losses from changes in demographic assumptions 1,056 2,132

Actuarial gains/losses from changes in financial assumptions 7,038 41,807

Return on plan assets greater than expected -14,394 -16,080

Actuarial gains (-)/losses (+) in other comprehensive income -6,300 27,859

The defined benefit plan in Ireland was terminated in 2013 and the available funds from the plan were distributed to the

members of the pension plan in January 2014. This resulted in settlement payments of TEUR 1,839 and effects from plan

reductions totaling TEUR 1,729.

Pension plan assets consist mainly of the assets from the fund-linked defined contribution pension plans in the USA, Great

Britain, Switzerland and Pipelife’s plan in the Netherlands. The plan assets are invested in stocks (36%; 2012: 32%), bonds

(32%; 2012: 52%) and other assets (32%; 2012: 16%).

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The sensitivity of the gross pension obligation was tested by modifying the major actuarial assumptions individually while

holding all other conditions constant. A negative amount represents a reduction of the obligation, while a positive amount

indicates an increase.

in TEUR Change of parameter in basis points (bps)/years

Increase of parameter

Decrease of parameter

Discount rate +/-25 bps -12,449 12,888

Salary increase +/-100 bps 4,452 -3,898

Employee turnover +/-100 bps -2,501 976

Mortality rate +/-1 year 10,265 -10,244

In 2012, a reduction of 25 basis points in interest rates would have led to an increase of TEUR 14,841, and an increase in

interest rates by the same amount would have resulted in a decrease of TEUR 12,937 in the gross pension obligation.

The contributions to pension plans are expected to total TEUR 7,507 in 2014. As of December 31, 2013, the weighted

average duration of the pension obligations was 15 years (2012: 15 years).

Severance compensation obligations

Legal regulations grant Austrian employees the right to a lump-sum payment at retirement or termination by the

employer, whereby the amount of the payment is dependent on the length of service. These future obligations are reflected in

provisions for severance payments. There are similar obligations in France, Italy and Poland.

The past service cost from defined benefit obligations for severance compensation is reported under operating results,

while the net interest effect is included under interest result.

The severance compensation obligations in France are covered by plan assets, which are held in stocks (8%) and other

assets (92%).

in TEUR 2013 2012

Service costs for defined benefit severance obligations 1,027 5,581

Effects of plan curtailments and settlements 5 0

Net interest cost 702 166

Expenses for severance payments 1,734 5,747

146

The composition of the severance compensation obligations is shown below:

Defined benefit obligations Fair value of plan assets

in TEUR 2013 2012 2013 2012

Value as of 1.1. 24,412 13,353 0 0

Changes in consolidation range 0 5,891 0 0

Transfers 464 0 1,971 0

Foreign exchange increase/decrease -166 33 0 0

Service costs for defined benefit severance obligations 1,027 5,581 0 0

Interest cost 702 166 0 0

Effects of plan curtailments and settlements 5 0 0 0

Actuarial gains/losses 642 675 0 0

Payments -4,156 -1,287 0 0

Value as of 31.12. 22,930 24,412 1,971 0

Fair value of plan assets -1,971 0

Present value of unfunded obligations 20,959 24,412

Actuarial gains/losses resulting from severance payment plans

Actuarial gains/losses from changes in demographic assumptions -158 -166

Actuarial gains/losses from changes in financial assumptions 800 841

Actuarial gains (-)/losses (+) in other comprehensive income 642 675

The sensitivity of the gross severance obligation was tested by modifying the major actuarial assumptions individually

while holding all other conditions constant. A negative amount represents a reduction of the obligation, while a positive

amount indicates an increase.

in TEUR Change of parameter in basis points (bps)/years

Increase of parameter

Decrease of parameter

Discount rate +/-25 bps -525 546

Salary increase +/-100 bps 2,111 -1,849

Employee turnover +/-100 bps -1,533 1,016

The contributions to severance compensation plans are expected to total TEUR 1,081 in 2014. As of December 31, 2013,

the weighted average duration of the severance compensation obligations was 8 years (2012: 9 years).

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26. Deferred taxes Deferred tax assets and deferred tax liabilities as of December 31, 2013 and December 31, 2012 are the result of the

following temporary valuation and accounting differences between carrying amounts in the consolidated financial statements

and the respective tax bases:

2013 2012

in TEUR Assets Equity and Liabilities Assets

Equity and Liabilities

Intangible assets 7,440 -54,275 5,716 -66,457

Property, plant and equipment 11,055 -114,097 11,102 -123,223

Inventories 2,743 -6,683 3,356 -4,704

Receivables 10,437 -9,208 14,315 -15,262

Deferred charges 62,112 -57 57,347 -64

93,787 -184,320 91,836 -209,710

Untaxed reserves 1,378 -21,067 1,626 -20,982

Provisions 27,002 -3,251 34,102 -9,412

Liabilities 8,325 -2,950 15,038 -3,375

Deferred income 473 -32 888 -518

37,178 -27,300 51,654 -34,287

Tax loss carryforwards 226,313 224,780

Deferred tax assets/liabilities 357,278 -211,620 368,270 -243,997

Valuation allowance for deferred tax assets -203,005 -190,605

Offset within legal tax units and jurisdictions -107,640 107,640 -138,175 138,175

Net deferred tax assets and liabilities 46,633 -103,980 39,490 -105,822

In the consolidated financial statements, deferred tax assets were not calculated on deductible temporary differences and

tax loss carryforwards of TEUR 699,552 (2012: TEUR 671,800) because medium-term planning did not reliably demonstrate

their use as tax relief. This represents deferred tax assets totaling TEUR 203,005 (2012: TEUR 190,605).

In accordance with IAS 12.39, deferred taxes were not calculated on temporary differences related to shares owned in

subsidiaries. The cumulative value of shares in subsidiaries exceeds the proportional share of equity owned in these subsidiaries

by TEUR 615,947 (2012: TEUR 538,337).

27. Liabilities Liabilities are generally measured at amortized cost. An exception is formed by derivatives with negative market values,

which are measured at fair value.

148

The remaining terms of the various categories of liabilities are shown in the following tables:

2013 in TEUR Total

Remaining term < 1 year

Remaining term 1-5 years

Remaining term > 5 years

Thereof secured by collateral

Interest-bearing loans 1,126,809 290,688 488,443 347,678 1,543

Finance leases 13 13 0 0 0

Financial liabilities owed to subsidiaries 196 196 0 0 0

Financial liabilities 1,127,018 290,897 488,443 347,678 1,543

Trade payables owed to third parties 267,318 267,318 0 0 19

Trade payables owed to subsidiaries 1,016 1,016 0 0 0

Trade payables 268,334 268,334 0 0 19

Prepayments received on orders 2,392 2,383 9 0 0

Payables for current taxes 12,359 12,359 0 0 0

Amounts owed to tax authorities and social security carriers 47,725 47,725 0 0 0

Deferred income 12,716 8,860 1,077 2,779 0

Miscellaneous 158,203 153,831 4,332 40 215

Other liabilities 233,395 225,158 5,418 2,819 215

Total liabilities 1,628,747 784,389 493,861 350,497 1,777

2012 in TEUR Total

Remaining term < 1 year

Remaining term 1-5 years

Remaining term > 5 years

Thereof secured by collateral

Interest-bearing loans 916,421 57,726 667,192 191,503 4,596

Finance leases 193 180 13 0 0

Financial liabilities owed to subsidiaries 156 156 0 0 0

Financial liabilities 916,770 58,062 667,205 191,503 4,596

Trade payables owed to third parties 252,848 252,536 312 0 0

Trade payables owed to subsidiaries 301 301 0 0 0

Trade payables 253,149 252,837 312 0 0

Prepayments received on orders 2,693 2,693 0 0 0

Payables for current taxes 14,670 14,670 0 0 0

Amounts owed to tax authorities and social security carriers 57,614 57,390 224 0 0

Deferred income 14,663 10,374 1,228 3,061 0

Miscellaneous 144,770 139,387 5,340 43 0

Other liabilities 234,410 224,514 6,792 3,104 0

Total liabilities 1,404,329 535,413 674,309 194,607 4,596

Current financial liabilities include a put option of TEUR 2,251 (2012: TEUR 13,315), whose exercise would result in the

transfer of non-controlling interests in Group companies to Wienerberger (see note 31. Information on financial instruments).

Other liabilities include TEUR 50,856 (2012: TEUR 49,771) due to employees and TEUR 56,733 (2012: TEUR 53,772)

of accruals for bonuses and other sales deductions due to customers. Deferred income includes TEUR 2,334 (2012:

TEUR 3,701) of subsidies and investment allowances granted by third parties, which are released to the income statement over

the useful life of the related assets. The amounts owed to tax authorities and social security carriers include tax liabilities

totaling TEUR 38,258 (2012: TEUR 36,649).

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149

Financial liabilities also include the following derivative financial instruments with negative market values:

Financial instruments held for trading

in TEUR 2013 2012

Derivatives from cash flow hedges 9,776 12,350

Derivatives from fair value hedges 0 864

Other derivatives 190 5,031

Derivatives with negative market value 9,966 18,245

Total liabilities include TEUR 1,616,530 of financial liabilities at amortized cost, TEUR 2,251 of financial liabilities at fair

value, TEUR 9,776 of derivatives in hedges and TEUR 190 of other derivatives.

Liabilities are expected to result in the following cash flows:

Analysis of contractual cash flows

2013

in TEUR Total < 6 months 6-12 months 1-2 years 2-5 years > 5 years

Bonds -986,411 -11,967 -271,444 -227,250 -151,750 -324,000

Liabilities to banks -240,761 -4,968 -10,653 -141,215 -57,130 -26,795

Liabilities to non-banks -8,092 -187 -7,181 -445 -279 0

Original financial instruments -1,235,264 -17,122 -289,278 -368,910 -209,159 -350,795

Interest rate derivatives 7,222 -671 1,968 1,476 4,449 0

Forward exchange contracts and interest rate swaps -3,697 6,254 3,261 -10,902 -2,310 0

Derivative financial instruments 3,525 5,583 5,229 -9,426 2,139 0

Contractual cash flows -1,231,739 -11,539 -284,049 -378,336 -207,020 -350,795

150

Analysis of contractual cash flows

2012

in TEUR Total < 6 months 6-12 months 1-2 years 2-5 years > 5 years

Bonds -635,876 0 -27,438 -277,438 -225,750 -105,250

Commercial paper -12,000 -12,000 0 0 0 0

Liabilities to banks -324,379 -16,905 -10,814 -5,594 -237,714 -53,352

Liabilities to non-banks -26,645 -113 -118 -20,296 -5,845 -273

Original financial instruments -998,900 -29,018 -38,370 -303,328 -469,309 -158,875

Interest rate derivatives -183 -56 -31 -50 -46 0

Forward exchange contracts, interest rate swaps and derivative liability -14,485 -5,340 -455 -253 -8,437 0

Derivative financial instruments -14,668 -5,396 -486 -303 -8,483 0

Contractual cash flows -1,013,568 -34,414 -38,856 -303,631 -477,792 -158,875

28. Contingent liabilities and guarantees Contingent liabilities result from obligations to third parties, and include the following:

in TEUR 31.12.2013 31.12.2012

Sureties 49 49

Guarantees 23,247 16,889

Other contractual obligations 2,947 2,313

Contingent liabilities 26,243 19,251

All events recorded under contingent liabilities reflect possible future obligations whose existence can only be confirmed

by the occurrence of a future event that is completely uncertain as of the balance sheet date.

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151

29. Financial instruments Financial liabilities comprise the following items:

Currency Nominal value Market value Carrying amount

per 31.12.2013 Effective

interest rate

2013 in 1,000 local currency in TEUR in TEUR in %

Loans EUR 125,990 138,898 126,396 5.62

Roll-over TRY 500 200 169 5.25

Current loans EUR 1,269 1,269 1,269 -

Fixed interest loans due to financial institutions 140,367 127,834

Currency Nominal value Market value Carrying amountper 31.12.2012

Effective interest rate


Loans EUR 132,906 147,247 128,064 5.63

Roll-over TRY 617 261 261 11.50

Current loans EUR 10,000 1,018 1,010 3.95

Fixed interest loans due to financial institutions 148,526 129,335

Currency Nominal value Market value Carrying amount per 31.12.2013


2013 in 1.000 local currency in TEUR in TEUR in %

Loans EUR 109,002 114,012 109,005 2.28

114,012 109,005

Roll-over EUR 149 148 149 0.41

HRK 13,907 1,808 1,823 3.97

1,956 1,972


CAD 182 124 124 -

HRK 201 26 26 -

USD 920 668 668 -

other 32 1 1 -

6,682 6,677

Derivatives EUR 9,963 9,963 9,963 -

other 13 3 3 -

9,966 9,966

Variable interest loans due to financial institutions 132,616 127,620

152




Loans EUR 146,090 154,846 146,108 1.91

CZK 83,000 3,303 3,300 1.64

GBP 1,500 1,839 1,838 1.80

HUF 1,300,000 4,435 4,447 7.05

SEK 40,000 4,662 4,661 2.63

USD 5,000 3,793 3,790 1.53

172,878 164,144

Roll-over EUR 3,726 3,736 3,726 3.23

CZK 10,121 403 402 1.28

HRK 14,572 1,933 1,928 4.25

RON 1,416 318 319 9.30

RSD 44,118 385 393 11.95

TRY 9,157 3,863 3,888 6.60

Other 201 201 -

10,839 10,857


HRK 201 27 27 -

USD 1,152 873 873 -

2,774 2,742

Derivatives EUR 13,245 13,245 13,245 -

13,245 13,245

Variable interest loans due to financial institutions 199,736 190,988

Currency Nominal value Market value Carrying amount

per 31.12.2013 Effective

interest rate

2013 in 1.000 local currency in TEUR in TEUR in %

Bonds – fixed interest EUR 844,300 863,582 838,933 4.64

EUR 20,970 20,970 20,970 -

Loans – fixed interest EUR 505 511 505 2.00

USD 296 201 214 -

Current loans – fixed interest EUR 5,818 5,933 5,820 4.00

TRY 7,880 2,662 2,662 -

Loans – variable interest GBP 1,877 2,251 2,251 -

Financial liabilities due to non-banks 896,110 871,355

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Bonds – fixed interest EUR 550,000 571,946 546,705 4.61

EUR 12,625 12,625 12,625 -

Loans – fixed interest EUR 6,187 6,773 6,187 3.69

USD 370 268 280 -

Commercial paper – fixed interest EUR 11,982 11,982 11,986 0.59

Loans – variable interest GBP 10,866 13,315 13,315 -

Derivative liabilities EUR 5,000 5,000 5,000 -

Financial liabilities due to non-banks 621,909 596,098

On April 11, 2013 Wienerberger issued a new bond with a volume of TEUR 300,000 and a seven-year term. This

instrument has a denomination of EUR 1,000 and a fixed coupon of 4.00%. The proceeds were used to refinance existing

liabilities, to fund the operating business and to improve the Group’s liquidity position. Bonds are recorded under non-current

or current borrowings in accordance with their remaining term. The related expenses of TEUR 9,411 (bank charges and

interest rate hedges) were recorded together with the respective bond and not recognized to profit or loss. These differences

are recognized as interest expense or bank charges over the term of the bond in accordance with the effective interest rate

method. The carrying amount of the bonds includes accrued interest of TEUR 20,970.

Interest rates (variable, fixed) can be exchanged through the conclusion of interest rate swaps. The structure of financial

liabilities (variable and fixed interest rates), including the effects of interest rate swaps, is shown on page 168.

30. Derivative financial instruments The market value for derivative financial instruments represents the value the company would receive or be required to

pay on settlement as of the balance sheet date. Current market conditions, above all current interest rates and the credit

standing of the swap partner, are taken into account in the determination of fair value. These valuation parameters can be

monitored on the market and are available to all market participants.

154

2013 2012

Currency Nominal value Market value Currency Nominal value Market value

31.12.2013 in 1,000 local

currency 31.12.2013

in TEUR

31.12.2012 in 1,000 local

currency 31.12.2012

in TEUR

Forward exchange contracts EUR 28,632 137 EUR 28,997 -28

CAD 0 0 CAD 3,000 30

CHF 0 0 CHF 3,000 -3

CZK 60,000 -12 CZK 60,000 -9

DKK 10,000 -2 DKK 6,000 -1

GBP 34,128 -506 GBP 13,757 113

HUF 1,914,912 -27 HUF 100,000 1

PLN 6,274 -3 PLN 8,101 -19

SEK 12,510 0 SEK 6,287 -4

TRY 0 0 TRY 19,693 -808

USD 12,000 -17 USD 0 0

Interest rate swaps EUR 73,000 4,326 EUR 77,000 5,656

Cross currency swaps CAD/EUR 40,000 2,498 CAD/EUR 42,500 -556

CHF/EUR 75,000 -9,043 CHF/EUR 75,000 -10,430

CZK/EUR 800,000 2,058 CZK/EUR 745,000 -379

DKK/EUR 108,000 0 DKK/EUR 108,000 -50

GBP/EUR 58,000 1,284 GBP/EUR 10,000 24

PLN/EUR 52,350 508 PLN/EUR 72,750 246

USD/EUR 80,000 3,310 USD/EUR 60,000 1,172

Derivative liability EUR 0 0 EUR 5,000 -5,000

4,511 -10,045

31. Information on financial instruments Financial instruments are classified in three levels that reflect the degree of valuation certainty. Wienerberger uses the

following hierarchy to classify financial instruments at fair value to a valuation method:

Level 1: Valuation based on the market price for a specific financial instrument

Level 2: Valuation based on the market prices for similar instruments or on valuation models that only use parameters

that can be monitored on the market

Level 3: Valuation based on models with significant parameters that cannot be monitored on the market

The financial instruments carried at fair value by the Wienerberger Group are generally classified under level 1 (shares in

funds, corporate bonds and stock; see note 21) or level 2 (other available-for-sale financial instruments and derivative financial

instruments; see note 30). No items were reclassified between hierarchy levels during the reporting year.

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The following table shows the financial assets and liabilities carried at fair value by Wienerberger:

in TEUR Level 1 Level 2 Level 3

Carrying amount per 31.12.2013

Shares in funds 7,290 7,290

Corporate bonds 19,470 19,470

Stock 6,452 6,452

Other 1,381 10,035 11,416

Available-for-sale financial instruments 34,593 10,035 44,628

Derivative hedges 9,675 9,675

Other derivatives 4,802 4,802

Derivatives with positive market value 14,477 14,477

Derivative hedges 9,776 9,776

Other derivatives 190 190

Derivatives with negative market value 9,966 9,966

Financial liabilities due to non-banks carried at fair value 2,251 2,251

The sellers of Sandtoft Ltd., a company acquired in 2008, were given a put option which entitles them to transfer the

remaining non-controlling interests to Wienerberger. The fair value of this put option was calculated on the basis of budgeted

EBITDA and the agreed multiple, and discounted with the country-specific WACC for Great Britain (6.58%); the put option is

classified under level three in the valuation hierarchy. After the partial exercise of this option by the seller, the liability was

reduced by TEUR 8,094 to TEUR 2,251. The position “reclassification” includes the valuation effects, which must be reported

as an adjustment to the opening balance sheet and not under financial results in accordance with the transition rules defined by

IFRS 3 (2008). Wienerberger assumes the remainder of the option will be exercised in 2014, and the item is therefore reported

under current financial liabilities.

The valuation of financial instruments classified under level three is shown in the following table:

in TEUR 2013

Balance on 31.12.2012 13,315

Additions 0

Results from valuation 0

Disposals -8,094

Reclassification -2,970

Balance on 31.12.2013 2,251

156

Wienerberger generally carries liabilities at amortized cost. The fair value of these liabilities can either be monitored on

the market, which permits classification under level 1 (bonds), or can be derived by means of an income approach, which

permits classification under level 2 (loans).

in TEUR Level 1 Level 2 Level 3

Carrying amount per 31.12.2013

Financial liabilities due to financial institutions 263,017 245,488

Bonds 884,552 859,903

Loans 712 719

Current loans 8,595 8,482

Financial liabilities due to non-banks 884,552 9,307 – 869,104

Significant Accounting Policies

Revenues: Revenue arising from the provision of goods or services is realized when all major risks and opportunities

arising from the delivered objects have been transferred to the buyer. In addition, a reliable measurement of the amount of the

revenues and the costs related to the sale must be possible. Revenues are presented net of rebates, discounts and bonuses.

Costs of goods sold: The cost of goods sold includes direct material and production costs as well as a proportional share of

overhead expenses for production equipment. Other components of the cost of goods sold are fixed production costs that

cannot be capitalized due to the underutilization of capacity, impairment charges to inventories and the procurement cost of

sold merchandise.

Construction contracts: When the results of construction contracts can be reliably estimated, the respective revenues and

costs are recognized in accordance with the percentage of completion method. Construction contracts are found in Pipelife’s

business and involve the production of LLLD (long length large diameter) pipes. The percentage of completion is based on the

number of tons produced. If the costs for a specific contract are expected to exceed the agreed revenues, a provision for

impending losses is recognized.

Government grants: Wienerberger records government grants at their fair value under liabilities. Their release is reported

under other income during the relevant accounting period when there is reasonable assurance that all conditions attached to

the grant have been met.

Earnings per share: The calculation of earnings per share is based on Group profit after tax less non-controlling interests

and the planned component of earnings attributable to hybrid bondholders, divided by the weighted number of shares

outstanding (less treasury shares).

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Intangible assets: Identifiable intangible assets purchased by the Group are recorded at acquisition cost less straight-line

amortization and any necessary impairment charges. Intangible assets with an indefinite useful life are tested annually for signs

of impairment.

Goodwill: In accordance with IFRS 3, goodwill arising through a business combination is allocated to cash-generating

units and not reduced through scheduled amortization, but tested at least once each year for indications of impairment.

Property, plant and equipment: Property, plant and equipment are recorded at acquisition cost less straight-line

depreciation or usage-based depletion (clay pits). The recognition of internally generated plant or equipment includes an

appropriate component of material and production overheads, but excludes general administrative and selling expenses. In

accordance with IAS 23, borrowing costs incurred during the production of qualified assets are capitalized as part of

acquisition cost and depreciated over the applicable useful life. Research and development expenses at Wienerberger also

include the costs for product development, process technology, the improvement of environmental standards and laboratory

activities. The development costs for successful research programs are generally capitalized under the related asset category.

The depreciation rates are based on the useful economic lives of the respective assets (component approach) as shown in

the following table:

Production plants (incl. warehouses) 40 years Other machinery 5 – 15 years

Administrative and residential buildings 40 – 50 years Fittings, furniture and office equipment 3 – 10 years

Building infrastructure 15 – 30 years Customer bases 5 – 15 years

Kilns and dryers 8 – 20 years Other intangible assets 3 – 10 years

Repairs that do not increase the presumed useful life of assets are expensed as incurred. In accordance with IFRS 5,

scheduled depreciation is discontinued when assets are classified as held for sale.

When plant or equipment is sold or retired, the gain or loss arising from the difference between the proceeds on sale and

the remaining carrying amount or impairment charge is recorded under other operating income or expenses if the transaction

reflects similar annually recurring events.

In accordance with IAS 17 Leases, leased fixed assets that represent purchases with long-term financing (finance leases)

are recorded at the price that would have been paid if the asset had been purchased. Depreciation is calculated over the lesser

of the useful life of the asset or the term of the lease.

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Impairment of non-financial assets: In accordance with IAS 36, assets are tested regularly if there are any indications of

lasting impairment. Assets are tested separately for impairment when it is possible to allocate distinct cash flows to the

individual asset. Impairment testing involves comparing the carrying amount of an asset with its recoverable amount, which

represents the higher of fair value less costs to sell and the value in use. An impairment loss is recognized when the recoverable

amount is lower than the carrying amount. Fair value less costs to sell is the price that would be received on the sale of an asset,

after the deduction of selling costs. The value in use is determined on the basis of an income approach and represents the

present value of expected future cash flows to be derived from the asset or cash-generating unit.

Independent cash flows cannot be allocated to intangible assets with an indefinite useful life. These assets are tested for

impairment as part of a cash-generating unit at least once each year in accordance with IAS 36.

The carrying amount of a fixed asset that was previously written down is increased to the recoverable amount if the

reasons for impairment cease to exist or a possible use is found for the item. In accordance with IFRS 36 and IFRIC 10,

previously recognized impairment losses to goodwill are not reversed.

Investment property is carried at depreciated cost and, with the exception of land, is depreciated on a straight-line basis.

Investments in associates, joint ventures and other companies: Investments in associates over which Wienerberger

exercises a significant influence (as a rule, between 20% and 50% of the shares) and joint ventures are carried at equity. Other

investments include companies that are not consolidated for materiality reasons and investments in which Wienerberger does

not have a significant influence. These investments are recognized at cost and only written down to fair value in the event of

lasting impairment. Impairment losses and revaluations are included under financial results.

Inventories: Inventories are carried at the lower of cost or net realizable value, whereby valuation is based on the moving

average method. Cost includes direct expenses as well as allocated overhead and depreciation based on normal capacity usage

(between 85 and 100% of capacity). Interest charges as well as selling and administrative expenses are not included in the

production cost of current assets. Risks resulting from the length of storage or other impairments in value are reflected through

appropriate write-downs.

Emission certificates: In accordance with IAS 20 and IAS 38, Wienerberger uses the acquisition cost of zero to record the

emission certificates allocated free of charge based on EU Emission Trading Directives 2003/87/EC and 2009/29/EC. If actual

emissions exceed the free certificates, the additional certificates required are recognized at their market price on the balance

sheet date. Purchased certificates are recorded at cost or the lower market price on the balance sheet date.

Financial instruments: A financial instrument is a contract that gives rise to a financial asset in one company and a

financial liability or equity instrument in another company. IAS 39 distinguishes between the category of loans and receivables,

financial instruments held to maturity, financial instruments available for sale and financial instruments at fair value through

profit or loss which, in turn, are classified further into financial assets/liabilities held for trading and financial instruments

designated as at fair value through profit or loss upon initial recognition.

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Cash transactions relating to financial assets are recognized as of the settlement date. A financial asset is derecognized

when the contractual rights to receive the related cash flows expire.

Loans and receivables are carried at amortized cost, whereby recognizable individual risks are reflected in appropriate

valuation adjustments. Non-interest bearing receivables with a remaining term in excess of one year are recorded at their

discounted present value. Foreign exchange receivables are translated at the exchange rate in effect on the balance sheet date.

Wienerberger has no held-to-maturity financial instruments.

Financial instruments carried at fair value through profit or loss are measured at fair value, with any gains and losses

resulting from changes in fair value recognized to profit or loss. Wienerberger holds no primary financial instruments for

trading purposes.

Wienerberger has not elected to use the option provided by IAS 39, which permits the initial recognition of financial

assets at fair value through profit or loss. Therefore, the primary financial instruments held by the Group that are not classified

as liquid funds and cash equivalents or loans and receivables are recognized as available-for-sale financial instruments.

Included here, above all, are short-term investments in the form of shares in funds, debt issued by corporations and shares that

are measured at fair value, and any gains and losses resulting from changes in fair value are recorded under other

comprehensive income without recognition to profit or loss up to the date of derecognition. An exception to this procedure is

formed by impairment losses that are recognized to reflect significant and lasting impairment; these losses are recognized to

profit or loss and reported under financial results. The fair value of listed securities is based on the relevant market prices,

whereby non-quoted financial assets are carried at cost less any changes in market value. When a financial instrument is

derecognized, all gains and losses accumulated in other comprehensive income are immediately recognized to profit or loss.

Derivative financial instruments: Derivative financial instruments are concluded only to hedge the risks arising from

business operations. Foreign exchange futures are used to hedge transaction risks, and interest rate swaps to optimize the fixed,

respectively variable interest rate component of financial liabilities. Cross currency swaps are used to hedge the net investments

in foreign subsidiaries that maintain their accounting in a currency other than the euro. All derivative financial instruments are

recorded at fair value when the contract is concluded in accordance with IFRS 13, whereby the counterparty default risk is

taken into account. The fair value of quoted financial instruments is based on the actual market price. The fair value of non-

quoted interest instruments is based on the discounted value of future payments and is calculated using a current market

interest rate. Derivative financial instruments that are not included in a hedge are classified as held for trading in keeping with

IAS 39. For derivative financial instruments included in a hedge, only the derivatives that are not part of an effective hedge

(ineffective portion) are valued through profit or loss; the relevant amounts are reported under financial results.

Wienerberger applies the IAS 39 rules for hedges to transactions that serve as hedges for translation risk as well as the

transaction risk associated with future cash flows. A cash flow hedge is defined as an instrument that provides protection

against fluctuations in the future cash flows attributable to recognized assets or liabilities. Changes in the market value of an

effective hedge are recognized directly in other comprehensive income (hedging reserve), while the non-effective components

are recognized to profit or loss and shown under financial results. The accounting treatment applied to a hedge of a net

investment in a foreign operation is similar: changes in the effective portion of the hedge are charged or credited to the hedging

reserve, while any gain or loss on the foreign currency translation of the hedged instrument is recorded under equity through

other comprehensive income. The accounting treatment applied to fair value hedges differs in that changes in the value of the

derivative used as a hedging instrument and any gain or loss on the hedged item attributable to the hedged risk are recognized

to profit or loss (basis adjustment).

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Non-current assets held for sale: Wienerberger owns land and buildings that are not used in business operations and

intends to realize the value of these assets through a sale. In accordance with IFRS 5, non-current assets held for sale must be

reclassified to current assets when they are available for immediate sale in their present condition and their sale is highly

probable within one year. If these requirements are met, the items are reported under current assets and measured at the lower

of the carrying amount and fair value less costs to sell. Scheduled depreciation is not recognized on assets held for sale.

Cash and cash equivalents include cash on hand, checks received, demand deposits and short-term investments as well as

deposits with financial institutions that have a fixed term of up to three months.

Provisions for pensions: The Wienerberger Group has both defined contribution and defined benefit pension plans.

Defined contribution plans carry no further obligation for the employer after the payment of premiums. The employer’s

contributions to these pension plans are reported under expenses for pensions. Under defined benefit plans, the employee is

promised a certain retirement benefit. The risk related to the actual retirement benefit is carried by the company up to the

point of payment. The provisions for defined benefit pension plans are calculated according to the projected unit credit

method. The valuation of pension commitments includes future increases in wages/salaries and pensions.

The provisions for pensions are calculated by independent actuaries based on the following parameters:

2013 2012

Discount rate 2.0% - 4.9% 2.2% - 4.7%

Expected salary increases 1.0% - 4.0% 1.0% - 4.2%

Expected pension increases 0.4% - 3.2% 1.5% - 3.0%

Average fluctuation rates 1.5% - 6.5% 1.5% - 6.5%

Mortality tables

Austria AVÖ 2008-P AVÖ 2008-P

Germany Heubeck 2005 G Heubeck 2005 G

Switzerland BVG 2010 GT BVG 2010 GT

USA RP-2000 Generational BB 2013 Static Ann/Non-Ann

Great Britain 105% of SAPS Normal Tables with allowance (CMI 2011)

105% of SAPS Normal Tables with allowance (CMI 2011)

Belgium MR-3/FR-3 MR-3/FR-3

France THTF 00-02 THTF 00-02

Netherlands AG Prognosetafel 2010-2062 AG Prognosetafel 2010-2062

The country-specific discount rates are based on the average interest rate for first-rate, fixed interest industrial bonds with

a term that reflects the average payment period of the obligations to employees.

The provisions for pensions are netted out with the pension plan assets that are held to cover commitments. In accordance

with IAS 19, actuarial gains and losses are recognized under other comprehensive income as incurred after the deduction of

deferred taxes. The interest component of post-employment benefits is reported separately under financial results. Expenses for

additions to the provisions for pensions are allocated to the various functional areas.

Commitments by US companies to cover medical costs for retired employees are recorded under provisions for pensions

because of their pension-like character.

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Provisions for severance compensation: Legal regulations grant Austrian employees the right to a lump-sum payment at

retirement or termination by the employer, whereby the amount of the payment is dependent on the length of service. These

future obligations are reflected in provisions for severance payments. There are similar obligations, among others, in France,

Italy and Poland. The provisions for severance compensation are calculated according to actuarial principles based on the

projected unit credit method. The country-specific discount rate is based on the same interest curve used to calculate the

pension obligations. The calculations are based on an interest rate of 2.0% to 4.7%, an expected increase of 1.7% to 5.1% in

wages and salaries as well as average employee turnover of 0.5% to 7.9%.

For employees in Austria whose employment relationship began after December 31, 2002, the employer contributes

1.53% of the gross wage or salary each month to an employee severance compensation fund. This fund represents a defined

contribution plan in accordance with IAS 19, and the related employer contributions are reported under severance

compensation expense.

Provisions for site restoration: In accordance with IAS 16, a provision for site restoration is created when a clay pit is

purchased. The underlying assumptions for these obligations are generally based on the regulations applicable in the respective

countries. The provisions for site restoration on clay pits purchased before 2005 are based on depletion and reflect the

transition rule to IAS 16. Long-term provisions that are expected to be used after 12 months are discounted and recorded at

their present value.

Provisions for guarantees: Wienerberger provides manufacturer’s guarantees, above all for clay products, which lead to

the recognition of provisions for guarantees on the balance sheet. These provisions are calculated on the basis of individual risks

and on the overall risk resulting from past experience. This involves the analysis of actual damage cases and the estimation of

potential obligations through stochastic methods.

Other provisions: Other current obligations which result from a past event and are expected to lead to an outflow of

resources, but whose timing or amount are uncertain, are recognized at their full cost in accordance with IAS 37 and reported

as provisions.

Deferred taxes: In accordance with IAS 12, the provision for deferred taxes includes all temporary valuation and

accounting differences arising between the financial statements prepared for tax purposes and the IFRS financial statements as

well as loss carryforwards whose future use is probable. Deferred tax assets also include tax credit entitlements which arise

from the expected use of existing loss carryforwards in future years and whose realization is probable. These entitlements are

calculated on the basis of planned operating results and the earnings effects from the reversal of taxable temporary differences.

Deferred taxes are calculated using the tax rate expected to be in effect when these differences reverse in the future, and is

based on the local tax rate applicable to the individual Group company. Future changes in tax rates are included if the relevant

legal amendment has been enacted as of the balance sheet date.

Financial liabilities: Liabilities are stated at the actual amount received, less transaction costs. Any premium, discount or

other difference between the amount received and the repayment amount is distributed over the term of the liability according

to the effective interest rate method and recorded under financial results. Therefore, the measurement of these items reflects

amortized cost. Foreign currency liabilities are translated at the exchange rate in effect on the balance sheet date. Wienerberger

has not elected to use the option provided by IAS 39, which permits the initial recognition of a financial liability at fair value

through profit or loss.

162

Transfer prices: There are several regional supply and delivery relationships between the individual operating segments.

Prices for the sale of goods between Group companies are established at arm's length based on the resale price method. Prices

for the provision of services between Group companies are established at arm's length based on the cost-plus method.

32. Foreign exchange translation The accounts of foreign companies are translated into the euro based on the functional currency method. The relevant

local currency is the functional currency in all cases since these companies operate independently from a financial, economic,

and organizational standpoint. All balance sheet positions, with the exception of equity, are translated at the closing rate at the

end of the reporting year (i.e. December 31, 2013). Goodwill is recorded as an asset in local currency and is also translated at

the closing rate on the balance sheet date for the financial statements. Expense and revenue items are translated at the average

exchange rate for the year.

Unrealized currency translation differences arising from non-current Group loans are offset against the translation reserve

without recognition to profit or loss. Currency translation differences arising from the use of the closing rate for the balance

sheet and the average exchange rate for the income statement are also reported under other comprehensive income.

Foreign currency swaps are used to limit the translation risk arising from the Group's brick activities in the USA,

Switzerland, Great Britain and certain countries in Eastern Europe. These transactions involve the conclusion of a foreign

currency-euro swap equal to the value of the foreign currency assets to be hedged.

The major exchange rates used for foreign currency translation developed as follows during the reporting year:

Closing rate on Average rate for the year

in EUR 31.12.2013 31.12.2012 2013 2012

100 British Pound 119.94722 122.53400 117.74957 123.30979

100 Bulgarian Lev 51.12997 51.12997 51.12997 51.12997

100 Danish Krone 13.40608 13.40303 13.40856 13.43427

100 Canadian Dollar 68.16168 76.12088 73.07965 77.85998

100 Croatian Kuna 13.11217 13.23189 13.19501 13.29481

100 Norwegian Krone 11.95743 13.60859 12.80949 13.37589

100 Polish Zloty 24.07144 24.54590 23.82376 23.89029

100 Romanian Lei 22.36636 22.49972 22.62961 22.42766

100 Russian Ruble 2.20631 2.47957 2.36200 2.50417

100 Swedish Krone 11.28783 11.65230 11.55864 11.48782

100 Swiss Franc 81.45976 82.83632 81.23081 82.96582

100 Czech Koruna 3.64604 3.97599 3.84916 3.97590

100 Turkish Lira 33.77808 42.46104 39.47046 43.21446

100 Hungarian Forint 0.33665 0.34211 0.33684 0.34560

100 US Dollar 72.51106 75.79203 75.29440 77.83166

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Risk Report

Principles of risk management The conduct of global operations exposes the Wienerberger Group to a variety of risks that are inseparable from

entrepreneurial activities. These risks have an effect on the business segments of the Group and on its assets, liabilities and

planned commercial decisions.

The Wienerberger Group follows a policy that is designed to identify and actively manage risks in the operating

environment. This policy is based on principles, which are defined by the Managing Board and monitored by the Supervisory

Board. The implementation of the risk strategy and the use of hedging instruments are coordinated centrally for the entire

Group.

Risk situation and operating risks relating to the Group’s markets As a producer of building materials, Wienerberger operates in a cyclical branch and is therefore affected by developments

in the major economies that form the backdrop for its business activities. The business environment is shaped, above all, by

macroeconomic developments, construction activity in both the residential and public (infrastructure) sectors and renovation.

The development of business is also influenced by consumer confidence, the unemployment rate, long-term interest rates, the

availability of financing, tax policies, building regulations and subsidies for housing construction as well as other factors outside

the Group’s control.

The unfavorable development of any or all of these factors can have a negative influence on the demand for Wienerberger

products, both in terms of the volumes sold and the price levels. Cyclical fluctuations in demand lead to a risk of excess

capacity, which may result in increased pressure on prices as well as a decline in margins and/or revenues that fails to cover

production costs. The building materials industry – and, as a part of this industry, also Wienerberger – is characterized by a high

share of fixed costs as a percentage of total costs due to its capital-intensive nature, and active capacity management therefore

represents a central instrument for corporate management. Production capacity is analyzed on a continuous basis, and adjusted

to reflect market demand through medium-term measures that include temporary or permanent plant closings as well as the

relocation of production to more efficient facilities.

Wienerberger views the markets in Central and Eastern Europe – including Hungary, the Czech Republic, Poland, Slovakia,

Slovenia, Croatia and above all Bulgaria, Romania and Russia – as long-term growth markets due to the high pent-up demand

for new residential construction. Weaker demand and increased pressure on prices in these growth markets can lead to

increased risk for the Wienerberger Group.

Furthermore, Wienerberger competes with other roof and wall materials such as concrete, wood, limestone, glass, steel,

aluminum and other wall and roofing materials, which exposes the Group to a risk of substitution. Our strong position as a

quality leader and investments in the development of premium products should allow us to minimize substitution risks. In

particular, these developments involve improvements in the physical properties as well as the economy of our products.

The building materials industry is subject to seasonal fluctuations, whereby substantially higher volumes are sold during

the months from April to October than in the rest of the year. Similar to the building materials industry, the earnings of the

Wienerberger Group are in part dependent on the weather, since long frost and rain periods have a negative influence on

demand through a decline in construction activity.

164

In order to avoid earnings fluctuations wherever possible, Wienerberger pursues a strategy of geographical diversification

with parallel concentration on the core business. This core business covers bricks and roof tiles as well as pavers and pipe

systems, and positions Wienerberger as a supplier of building material solutions for residential construction and infrastructure

projects. Our activities are subject to the usual risks inherent in local markets, where positions must be repeatedly defended

against competitors and substitute products. The Group's most important customer group is the building materials sector, and

further market adjustments in this branch are expected to increase pressure on prices in the future. Specific market situations

can also have a negative impact on price levels, and Wienerberger therefore monitors its price strategy on a continuous basis.

As a multinational corporation, Wienerberger operates in countries that are in different stages of economic and social

development. Unfavorable changes in political or economic conditions therefore represent additional sources of risk. The

activities of the Wienerberger Group could also be materially affected by the following factors: changes in tax laws on

individual markets, in the taxation of energy sources or in labor law; the effect of language and cultural differences on the

coordination of international activities; the limitation of opportunities for the repatriation of profits; an increase in legal

requirements for the utilization of raw materials; product standards and product liability law; and environmental and safety

standards. The growth markets of Russia and India also carry a risk that production equipment may be expropriated without

proper compensation. Especially in these markets, Wienerberger is additionally exposed to tax risks that could arise from a

change in tax laws or the interpretation of existing tax laws. However, the company is not able to quantify the probability of

occurrence or the extent of these potential risks at the present time.

The plastic pipe business is substantially influenced by the development of raw material prices, which correlates closely

with the price of crude oil. Synthetic polymers comprise a major part of the production cost for plastic pipes. The volatility of

raw material prices has increased considerably in recent years. Strong fluctuations within individual months require flexible

pricing to limit the effects of these price changes and/or pass them on to the market. Fast, coordinated price management is

also a decisive factor for the sustainable protection of earnings. In addition to price risk, this business is exposed to a raw

material supply risk. Any interruption in supplies would invariably disrupt production. This risk is met, with few exceptions, by

developing alternative suppliers for raw materials.

Procurement, production, investment and acquisition risks Wienerberger has a modern and efficient plant network. Therefore, the risk of operating breakdowns or a longer loss of

production due to technical problems is low. Supplies of clay raw materials for the production of bricks and clay roof tiles are

guaranteed on a lasting basis by sufficient deposits and long-term supply contracts.

The cost of energy for the firing of bricks represents a significant percentage of the Group’s cost structure. In 2013 energy

costs for the Wienerberger Group totaled TEUR 278,158 (2012: TEUR 284,526), or 10.4% (2012: 12.1%) of revenues. These

expenses consist of 61% for natural gas, 31% for electricity and 8% for other materials. Energy prices are dependent on

international and local market developments, and are subject to fluctuations.

Wienerberger works to minimize the risk connected with rising energy prices in liberalized markets (in total, 80% of

energy costs) by concluding futures contracts as well as fixed-price agreements or other contracts with national and

international suppliers, in which prices are determined using formulas that are tied to substitute products (such as heating oil).

These prices are in part established for longer periods of time. Therefore, futures can be concluded as a hedge against risk using

a link to these substitute products. In numerous East European countries (in total, 20% of energy costs) the prices for natural

gas are regulated by the federal government and contracts with local suppliers are negotiated each year.

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Wienerberger was awarded carbon leakage status for its European brick activities in 2011 and expects the resulting

allocation of CO2 certificates will be sufficient to cover emissions. This status will be reviewed in 2014.

In addition to price risk Wienerberger is also exposed to an energy supply risk, in particular with respect to natural gas and

electricity. Any disruption of energy supplies would invariably lead to the standstill of production, and could therefore have a

negative effect on operating profit if demand cannot be met from inventories.

Continuing optimization (operational excellence) and product innovations as well as internal and external growth projects

are required to increase the value of Wienerberger. The future profitability of these projects is dependent to a large degree on

the investment volume and/or acquisition price as well as the development of the market. For this reason, all growth projects

must meet the defined return on investment criteria for the Group’s bolt-on and strategic projects. The entry into new markets

is also connected with risks involving competition, planning accuracy and the evaluation of the political situation as well as the

successful, profitable development of business. New projects are therefore analyzed extensively in advance, both from a

qualitative and quantitative standpoint.

Financial risks In addition to financing risk, operating activities expose Wienerberger to interest rate and exchange rate risks. Derivative

financial instruments, in particular forward exchange contracts and interest rates swaps, as well as operational measures are

used to limit and manage this risk. All cash flow hedges and hedges of investments in foreign operations are classified as highly

effective in accordance with IAS 39.88 as a means of offsetting the hedged risks in keeping with risk management objectives.

No derivatives are held for speculative purposes.

The refinancing sources open to Wienerberger are determined by numerous financial, macroeconomic and other factors

beyond the control of management. These factors include covenants in the existing and future debt arrangements as well as the

maintenance of the current rating. According to these covenants, the ratio of net debt to operating EBITDA may not exceed

3.5 years; this indicator equaled 2.0 years as of December 31, 2013. Moreover, operating EBITDA/net interest result equaled

4.8 for the reporting year and substantially exceeded the threshold of 3.75 that was defined in 2011. Part of earnings is used for

the payment of interest on debt and is therefore not available for other purposes. If the Group’s rating should deteriorate or

covenants are not met, interest expense could rise due to an increase in the credit risk premium and lead to higher financing

costs and lower cash flow. The failure to comply with covenants could also result in a loan becoming due immediately.

Exchange rate risks

A significant portion of the revenues and earnings of the Wienerberger Group are generated by subsidiaries whose

headquarters are not located in the euro zone. Wienerberger recorded 46% of its revenues for the reporting year in currencies

other than the euro, predominately East European currencies (19%) and the US dollar (8%). The exchange rate risk connected

with cash flows is immaterial due to the local nature of the building materials business. Cash flows into or out of the euro

region are almost entirely related to Group dividends or loans. The foreign exchange risk on these intra-group cash flows is

managed by the holding company.

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Credit financing for the purchase of current assets is concluded in the local currency of the individual companies because

of the decentralized structure of the Wienerberger Group. Foreign exchange risk in the financing area is therefore reduced to a

minimum, since the Group companies generally issue their invoices in local currency and these transactions form a natural

hedge. The exposure of financial liabilities to foreign exchange risk is discussed in note 29.

However, the translation of foreign company financial statements into the euro results in currency translation differences

(translation risk), which are recorded in other comprehensive income under foreign exchange adjustments. The revenues,

earnings, and balance sheet items of companies not headquartered in the euro region are therefore dependent on the relevant

euro exchange rate.

The Wienerberger risk strategy calls for minimizing the translation risk arising from net investments in foreign subsidiaries

to a certain extent through hedging. The following table shows Group revenues and capital employed by currency, whereby the

calculation of capital employed includes the effects of forward exchange contracts and foreign currency swaps.

2013 2012

Revenues in € mill. Share in % in € mill. Share in %

Euro 1,439.7 54 1,327.0 56

East European currencies 506.0 19 438.4 19

US Dollar 199.1 8 164.3 7

Other 518.1 19 425.8 18

Revenues 2,662.9 100 2,355.5 100

2013 2012

Capital employed in € mill. Share in % in € mill. Share in %

Euro 1,691.1 61 1,640.5 56

East European currencies 523.2 19 575.4 20

US Dollar 314.0 11 358.6 12

Other 239.3 9 356.7 12

Capital employed after hedging effect 2,767.6 100 2,931.3 100

The effects of a hypothetical change in foreign exchange rates on earnings and equity are shown in the form of sensitivity

analyses. For the purpose of this presentation, change is defined as the year-on-year increase or decrease in the relevant

exchange rate versus the euro as of the balance sheet date. As of December 31, 2013, an increase of one annual volatility

calculated on the basis of daily changes in the relevant exchange rates against the euro would have led to a decrease of

MEUR 85.1 (2012: MEUR 90.4) in equity and a decrease of MEUR 1.5 (2012: MEUR 1.4) in profit after tax. A decline in the

euro compared with the major currencies would have led to a similar increase in equity and profit after tax.

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Interest rate risks

Interest rate risk is comprised of two components: the relevant value (minimum or maximum) of the average term for the

Group’s financing and the separation into fixed and variable interest rates. The risk associated with fixed interest rates lies in a

possible decline in interest rate levels, while the risk associated with variable interest rates arises from the possibility of an

increase in interest rates. A parallel upward shift of 100 basis points in interest rates would have decreased profit after tax by

MEUR 0.2 (2012: MEUR 0.8) and, through this change in the income statement, also decreased equity by the same amount. A

decrease of 100 basis points in interest rates would have increased profit after tax and equity by a similar amount.

The risk position of Wienerberger AG with respect to the interest rate risks arising from liabilities with fixed and variable

interest rates is explained below.

In order to analyze interest rate risk (fixed and variable interest rates), financial liabilities (see pages 151 to 153) are

adjusted for the effects of derivative instruments (hedging) and short-term fixed-interest financial liabilities are treated as

variable interest items. Sensitivity analyses were carried out on fixed interest and variable interest financial liabilities to estimate

the impact on earnings and equity.

2013 2012

in TEUR Fixed

interest rate Variable

interest rate Fixed

interest rate Variable

interest rate

Interest-bearing loans 996,938 129,871 707,118 209,303

Reclassification of short-term fixed interest rate loans -248,684 248,684 -13,635 13,635

Effects of derivative instruments (hedging) -27,000 27,000 -23,000 23,000

Interest-bearing loans after hedging effects 721,254 405,555 670,483 245,938

Credit risks

Wienerberger has established strict requirements for the credit standing of its financial partners, which are defined in

internal financial and treasury guidelines. The credit risk connected with the investment of liquid funds and securities is limited

because Wienerberger works only with financing partners whose credit rating leads to expectations of a sound financial

standing and sets counterparty limits based on this credit rating. However, financial partners with an excellent rating can also

pose a credit risk and Wienerberger therefore continuously monitors developments on financial markets and adjusts credit

limits accordingly.

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The following table shows the maximum exposure of trade receivables and miscellaneous receivables to credit risks as of

December 31, 2013, classified by region:

2013 2012

Credit risk in € mill. Share in % in € mill. Share in %

Western Europe 135.2 47 138.3 51

Central-East Europe 93.3 32 90.3 33

North America 19.9 7 20.9 8

Other 39.1 14 20.9 8

Credit risk for the Group 287.5 100 270.4 100

Trade receivables, of which MEUR 125 are insured against default, consist primarily of receivables due from building

material retailers and large customers because the Group sells almost no products to final customers. Impairment charges to

receivables equaled less than 1% of trade receivables, originated loans and other current receivables in 2013, and were not

classified separately for this reason.

Liquidity risks

The protection of liquidity and the preservation of a healthy financial base represent the focal points of the Wienerberger

strategy. Accordingly, Wienerberger strengthened its financial position with the issue of a new bond in 2013 to refinance

financial liabilities that were scheduled for repayment in 2014. The most important instruments in this respect are the

maximization of free cash flow through cost reduction, active working capital management and a cutback in investments to the

necessary minimum. Liquidity risks arise, above all, when cash flows from revenues fall below expectations because of weaker

demand and the measures to reduce working capital and cash outflows for fixed costs (active capacity management) are not

sufficient or can only be implemented with a delay.

Liquidity is managed on a regular basis, among others, on rolling monthly liquidity forecasts as well as a regular analysis of

the cash conversion cycle, which is based on average accounts payable turnover, inventory turnover and receivables conversion.

The receivables conversion period averaged 34 days in 2013 (2012: 26), the inventory turnover period averaged 106 days

(2012: 111) and the payable turnover period averaged 41 days (2012: 44). This resulted in a cash conversion cycle of 98 days in

2013 compared with 93 days in the prior year.

An analysis of the liquidity risks arising from liabilities is provided on page 149.

Legal risks Business combinations may be subject to the approval of antitrust authorities, depending on the market position in

individual countries and/or the size of the planned acquisition. These approval procedures could lead to delays or, in individual

cases, to the prohibition of specific acquisitions or mergers. Wienerberger evaluates the antitrust risk associated with an

acquisition together with national and international legal and business experts during the early stages of work on a project in

order to minimize this risk. No acquisitions planned by the Group have ever been prohibited.

Wienerberger AG

Annual Report 2013


169

The pricing policies of Group subsidiaries are actively monitored by competition authorities because of Wienerberger’s

position on individual regional markets. The MEUR 10 provision created for an impending antitrust penalty as of December 31,

2008 was released during the reporting year following the termination of the respective proceedings. In June 2012 the EU

Commission ordered searches at the offices of plastic pipe and fitting producers in connection with alleged agreements in

violation of cartel law, which also included Pipelife International GmbH. The responsible authorities have not issued any

findings to date. It should be noted that price-fixing agreements are not part of business policies in the Wienerberger Group;

internal guidelines expressly prohibit such activities and call for sanctions in the event of violations.

In 2013 the European Commission launched an investigation to determine whether the partial exemption from the

German surcharge for the promotion of renewable energies, which is granted to electricity-intensive companies (so-called

“EEG levy”), is in agreement with EU regulations for government assistance. The opening of the proceedings brought only a

preliminary opinion by the Commission and does not support any conclusions over a possible outcome. The federal

government in Germany does not see any violation of the EU regulations for government assistance, and Wienerberger

therefore sees only a minimal risk that previously received subsidies must be repaid.

In connection with real estate transactions carried out in earlier years, Wienerberger AG is liable for possible

contamination and the resulting damages during its ownership.

Other risks Wienerberger is subject to extensive and increasingly strict environmental, health and safety laws in many countries, which

can lead to investments for compliance with these regulations. The failure to comply with these regulations could result in

administrative fines, the assessment of damages or the suspension of operating permits. In Italy the authorities have launched

an investigation into possible environmental pollution at the Wienerberger locations, which has not produced any results to

date.

Wienerberger plants exceed current legal requirements for the prevention of environmental damage, but the

intensification of environmental standards presents the Group with a continuous range of new challenges. Legal commitments

are identified and met through knowledge of current legal and contractual requirements as well as cooperation with experts

and external consultants. Risks arising from the restoration of clay pits are part of the company’s operating risk and are

monitored continuously.

The risks associated with a breakdown of our centralized Group data processing system as the result of natural disasters

have been minimized through the installation of redundant systems at facilities in different locations.

In recent years, a number of building materials companies with operations in the USA became the subject of class action

suits from patients with asbestos-related diseases. After an examination of our US activities, we have classified this risk as

minimal because none of our American subsidiaries has ever produced or sold asbestos products.

The Wienerberger Group also competes with other firms on the labor market. In order to train future managers and

prepare these persons for management positions, Wienerberger has developed curricula that include the Sales Academy, the

Plant Manager Program and the Ready4Excellence Program. Wienerberger uses these programs and personalized training

measures to optimally train its employees and to also strengthen their ties to the company (see the Wienerberger Sustainability

Report for additional information).

170

Other Information

33. Related party transactions The following companies and persons are considered to be related parties of Wienerberger: the members of the

Supervisory and Managing Boards, associated companies, joint ventures and non-consolidated subsidiaries of Wienerberger AG

as well as the ANC private foundation and its subsidiaries. Transactions with companies in which members of the Supervisory

Board of Wienerberger AG are active reflect third-party conditions. Business relationships between the company and related

parties, in particular members of the Managing and Supervisory Boards of Wienerberger AG, are disclosed in note 10 if any

payments to these persons are involved. Transactions between companies included in the consolidated financial statements and

one former member of the Supervisory Board of Wienerberger AG are related primarily to clay deliveries of TEUR 88 (2012:

TEUR 27), rentals of TEUR 2,103 (2012: TEUR 2,354) and license payments of TEUR 2,934 (2012: TEUR 2,846) for the use

of brand names.

The ANC private foundation operates landfill activities in Austria that were transferred by Wienerberger AG in 2001 and

owns a limited amount of assets (in particular real estate). This foundation is directed by a three-member management board

and has no advisory board. The beneficiaries of the foundation are the shareholders of Wienerberger AG, at an amount equal to

their proportional holdings. The members of the Managing Board of Wienerberger AG hold no positions on the management

boards of the foundation or its subsidiaries. Wienerberger has no influence on the foundation’s business activities and is not

obliged to make any further contributions to the assets of the foundation or its subsidiaries. Based on the scope of services

exchanged between Wienerberger AG and the ANC private foundation and in accordance with SIC 12, the requirements for

consolidation as defined in IAS 27 are not met.

Wienerberger AG and its subsidiaries finance associates, joint ventures and non-consolidated subsidiaries through loans

granted at ordinary market conditions. The outstanding receivables due from associates and joint ventures amounted to

TEUR 20,403 as of December 31, 2013 (2012: TEUR 15,530), while the comparable amount for non-consolidated subsidiaries

was TEUR 7,344 (2012: TEUR 6,707).

Wienerberger AG

Annual Report 2013


171

34. Share-based payments On May 11, 2010 the Supervisory Board of Wienerberger AG approved the implementation of a new share-based

remuneration program for the members of the Managing Board and key managers. This new program is a long-term variable

compensation system, which replaces the stock option plan that was discontinued in 2009. The long-term incentive (LTI)

program is a remuneration plan with cash settlement. It is designed to meet the requirements of the Austrian Corporate

Governance Code, which call for a sustainable increase in the value of a company. Accordingly, the model is linked to the

development of CFROI in the Wienerberger Group as well as the development of the Wienerberger share. The calculation basis

for the LTI is formed by virtual shares, so-called performance share units (PSUs), which are allocated to the program

participants in accordance with their position in the company. The average price of the Wienerberger share on the last 20 ATX

trading days of the performance period is used as a multiplier. The resulting variable remuneration is paid out in three tranches,

with cash settlement made in equal parts over a target corridor. If CFROI falls below the achievement corridor, the payments

are cancelled. A condition for participation by the members of the Managing Board is an investment in Wienerberger shares.

In 2013, an LTI plan was approved for the allocation of virtual shares to the Managing Board and management. This plan

covered the distribution of 190,000 virtual shares to the Managing Board (CEO: 110,000, CFO: 80,000) and 164,000 virtual

shares to management. The related provision amounted to TEUR 2,884.

The Managing Board of Wienerberger AG released the consolidated financial statements on February 24, 2014 for

distribution to the Supervisory Board. The Supervisory Board is responsible for examining and approving the consolidated

financial statements.

Vienna, February 24, 2014

The Managing Board of Wienerberger AG

Heimo Scheuch

Willy Van Riet

Chief Executive Officer Chief Financial Officer

Heimo Scheuch Willy VWilly VW Riet

172

We confirm to the best of our knowledge that the consolidated financial statements give a true and fair view of the assets,

liabilities, financial position and profit or loss of the Group as required by the applicable accounting standards and that the

Group management report gives a true and fair view of the development and performance of the business and the position of

the Group, together with a description of the principal risks and uncertainties the Group faces.

We confirm to the best of our knowledge that the separate financial statements give a true and fair view of the assets,

liabilities, financial position and profit or loss of the parent company as required by the applicable accounting standards and

that the management report gives a true and fair view of the development and performance of the business and the position of

the company, together with a description of the principal risks and uncertainties the company faces.


The Managing Board of Wienerberger AG

Heimo Scheuch Willy Van Riet

Chief Executive Officer Chief Financial Officer

Heimo Scheuch Willy Willy W VaVaV n Riet

Group Companies

Wienerberger International N.V. Zaltbommel 50,000 EUR 100.00% VK

Wienerberger Ziegelindustrie GmbH Hennersdorf 5,000,000 EUR 100.00% VK

Salzburger Ziegelwerk GmbH& Co KG Oberndorf 438,000 EUR 100.00% VK

Wienerberger zRt. Budapest 2,140,000,000 HUF 100.00% VK

Wienerberger Management Service Szolgáltató és Tanácsadó Kft. Budapest 3,000,000 HUF 100.00% OK 1)

Wienerberger cihlarsky prumysl, a.s. Ceske Budejovice 50,000,000 CZK 100.00% VK

Cihelna Kinsky, spol. s r.o. Kostelec nad Orlici 2,000,000 CZK 68.80% VK

Wienerberger cihelna Jezernice, spol. s r.o. Ceske Budejovice 200,000 CZK 100.00% VK

Wienerberger cihelna Hodonín, spol. s.r.o. Ceske Budejovice 50,000,000 CZK 100.00% VK

Wienerberger eurostroj, spol. s r.o. Ceske Budejovice 32,100,000 CZK 100.00% VK

Wienerberger Bohemia cihelny, spol. s r. o. Ceske Budejovice 44,550,000 CZK 100.00% VK

Silike keramika, spol. s.r.o. Ceske Budejovice 100,000 CZK 50.00% EQ

Wienerberger slovenské tehelne spol. s r.o. Zlate Moravce 3,319,392 EUR 100.00% VK

Wienerberger Ceramika Budowlana Sp. z o.o. Warszawa 374,324,808 PLN 100.00% VK

Handel Ceramika Budowlana Sp. z o.o. Warszawa 50,000 PLN 40.00% OK 1)

Wienerberger Zeslawice Sp. z o.o. Warszawa 29,490,000 PLN 99.81% VK

Wienerberger Ilovac d.d. Karlovac 8,988,040 HRK 99.92% VK

Wienerberger Cetera d.d. Karlovac 359,240 HRK 99.71% VK

IGM Ciglana d.o.o. Petrinja Petrinja 12,756,900 HRK 100.00% VK

WIENERBERGER Industrija opeke d.o.o. Sarajevo 2,000 KM 100.00% VK

Wienerberger Opekarna Ormoz d.o.o. Ormoz 951,986 EUR 100.00% VK

Opekarna Pragersko d.o.o. Pragersko 1,022,743 EUR 100.00% VK

Wienerberger Backa d.o.o Mali Idos 651,652 EUR 100.00% VK

WIENERBERGER Sisteme de Caramizi S.R.L. Bucuresti 39,147,100 RON 100.00% VK

WZI FINANZ-S.à.r.l. Luxembourg 73,963,917 USD 100.00% VK

Wienerberger TOV Kyiv 3,000,000 UAH 100.00% VK

Semmelrock International GmbH Wien 3,000,000 EUR 100.00% VK

Semmelrock Baustoffindustrie GmbH Klagenfurt 1,000,000 EUR 100.00% VK

Semmelrock Stein + Design GmbH Klagenfurt 35,000 EUR 62.50% VK

Semmelrock Stein + Design GmbH& CoKG Klagenfurt 100,000 EUR 62.50% VK

Semmelrock Industriebeteiligungsverwaltung GmbH Wien 35,000 EUR 100.00% VK

Semmelrock Stein & Design Kft. Ócsa 983,100,000 HUF 100.00% VK

SEMMELROCK STEIN + DESIGN Dlazby s.r.o. Sered 3,027,286 EUR 100.00% VK

Semmelrock Stein & Design d.o.o. Ogulin 22,870,000 HRK 100.00% VK

Semmelrock Stein & Design Sp. z o.o. Kolbiel 42,070,000 PLN 100.00% VK

Semmelrock Stein + Design S.R.L. Bolintin-Vale 55,151,300 RON 100.00% VK

Semmelrock Tlakovci d.o.o. Ormoz 8,763 EUR 100.00% OK 1)

Semmelrock Stein + Design Dlazby a.s. Ledcice 2,000,000 CZK 100.00% VK

Semmelrock Stein und Design EOOD Sofia 13,785,500 BGN 100.00% VK

Wienerberger GmbH Hannover 9,500,000 EUR 100.00% VK

Schlagmann Beteiligungs GmbH Zeilarn 26,000 EUR 50.00% OK 1)

Schlagmann Poroton GmbH & Co KG Zeilarn 10,300,000 EUR 50.00% EQ

Tongruben Verwaltungs GmbH Hannover 26,000 EUR 100.00% OK 1)

RM 2964 Vermögensverwaltungs GmbH Hannover 25,000 EUR 100.00% OK 1)

MR Erwerbs GmbH & Co KG Hannover 100 EUR 100.00% VK

ZZ Wancor AG Regensdorf 1,000,000 CHF 100.00% VK

Company Headquarters Share capital Currency Interest Type of consolidation Notes

173

Wienerberger Aer Aer GAnnual Report 2013

Financial StatementsStatement by the Managing BoardGroup Companies


Wienerberger S.p.A. Bubano 10,000,000 EUR 100.00% VK

Fornaci Giuliane S.p.A. Cormons 1,900,000 EUR 30.00% EQ

Wienerberger NV Kortrijk 47,557,745 EUR 100.00% VK

Wienerberger Asset Management NV Zonnebeke 13,240,053 EUR 100.00% VK

Deva-Kort NV Kortemark 247,894 EUR 100.00% VK

EUCOSO Sp. z o.o. (in liquidation) Zlotorya 60,000 PLN 49.00% EQ

Wienerberger Lanaken NV (in liquidation) Lanaken-Veldwezelt 7,000,000 EUR 100.00% VK

Wienerberger B.V. Zaltbommel 36,778,680 EUR 100.00% VK

Van Hesteren & Janssens B.V. Zaltbommel 363,024 EUR 100.00% VK

Desimpel AK1 B.V. Zaltbommel 70,000 EUR 100.00% VK

BrickTrading Holland B.V. Zaltbommel 18,000 EUR 100.00% VK

German Brick Trading B.V. Zaltbommel 249,700 EUR 100.00% VK

Oostergrachstwal Holding B.V. Zaltbommel 45,378 EUR 100.00% VK

Feikema B.V. Zaltbommel 45,378 EUR 100.00% VK

Gelsing Oosterhout B.V. Zaltbommel 18,200 EUR 100.00% VK

Wienerberger Steenvisie B.V. Zaltbommel 18,000 EUR 100.00% VK

Bos & Vermeer B.V. Zaltbommel 22,689 EUR 100.00% VK

Aberson B.V. Zwolle 60,000 EUR 100.00% VK

Steencentrale Neerbosch B.V. Deest 45,400 EUR 100.00% VK

Leeuwis B.V. Deest 91,210 EUR 100.00% VK

Steinzentrale Nord Leeuwis GmbH Rellingen 52,500 EUR 100.00% VK

Straatsbaksteen Nederland B.V. Zaltbommel 18,000 EUR 100.00% VK

Wienerberger Limited Cheshire 81,120,552 GBP 100.00% VK

Galileo Brick Limited Cheshire 2,000,000 GBP 100.00% VK

Chelwood Group Unlimited Cheshire 5,975,506 GBP 100.00% VK

The Brick Business Limited Cheshire 900,002 GBP 100.00% VK

Building Trade Products Limited Cheshire 1 GBP 100.00% VK

Galileo Trustee Limited Cheshire 1 GBP 100.00% VK

Sandtoft Roof Tiles Limited Sandtoft 11,029 GBP 94.96% VK

Sandtoft Trading Limited Sandtoft 1,000 GBP 94.96% VK

WIENERBERGER PARTICIPATIONS SAS Achenheim 36,000,000 EUR 100.00% VK

WIENERBERGER SAS Achenheim 75,000,000 EUR 100.00% VK

Briqueterie de Rouffach SAS Rouffach 336,120 EUR 100.00% VK

Wienerberger A/S Helsinge 107,954,000 DKK 100.00% VK

Wienerberger AS Lunde 43,546,575 NOK 100.00% VK

Wienerberger AB Bjärred 17,550,000 SEK 100.00% VK

General Shale, Inc Johnson City 5,491 USD 100.00% VK

General Shale Brick, Inc. Johnson City 1,000 USD 100.00% VK

General Shale Finance S.à.r.l. Luxembourg 12,500 EUR 100.00% OK 1)

General Shale Building Materials, Inc. Johnson City 1,000 USD 100.00% VK

General Shale Canada Acquisitions Inc. Halifax 28,500,000 CAD 100.00% VK

Arriscraft International LP Cambridge 1 CAD 100.00% VK

General Shale Canada GP Inc. Halifax 1 CAD 100.00% OK 1)

Wienerberger EOOD Sofia 12,500,000 BGN 100.00% VK

Uspeh AD Sofia 2,141,220 BGN 99.66% VK

174

175

OOO „Wienerberger Kirpitsch“ Kiprewo 612,694,577 RUR 81.94% VK

OOO „Wienerberger Kurkachi“ Kurkachi 650,036,080 RUR 81.94% VK

OOO „Wienerberger Investitions- und Projektmanagement“ Kiprewo 356,000 RUR 99.82% VK

Wienerberger OY AB Helsinki 1,000,000 EUR 100.00% VK

Wienerberger AS Aseri 1,540,736 EUR 100.00% VK

UAB Wienerberger Statybine Keramika Sp. Z o.o. Vilnius 10,000 LTL 100.00% VK

Wienerberger India Private Limited Bangalore 990,000,000 INR 100.00% VK

PIPELIFE International GmbH Wiener Neudorf 29,000,000 EUR 100.00% VK 2)

Pipelife Asset Management GmbH Wiener Neudorf 35,000 EUR 100.00% VK

Pipelife Austria GmbH & Co KG Wiener Neudorf 4,360,370 EUR 100.00% VK

Pipelife Austria GmbH Wiener Neudorf 36,337 EUR 100.00% VK

Pipelife Belgium NV Kalmthout 10,890,000 EUR 100.00% VK

Pipelife Bulgaria EOOD Botevgrad 30,000 BGN 100.00% VK

Pipelife Czech s r.o. Otrokovice-Kucovaniny 202,971,000 CZK 100.00% VK

PIPELIFE Deutschland Asset Management GmbH Bad Zwischenahn 26,000 EUR 100.00% VK

PIPELIFE Deutschland GmbH & Co. KG Bad Zwischenahn Bad Zwischenahn 5,000 EUR 100.00% VK

Pipelife Deutschland Verwaltungs-GmbH Bad Zwischenahn Bad Zwischenahn 5,726,469 EUR 100.00% VK

Pipelife Eesti AS Harjumaa Eesti Vabariik 2,422,400 EUR 100.00% VK

Pipelife Finland OY Oulu 33,637 EUR 100.00% VK

Pipelife France SNC Gaillon 19,743,000 EUR 100.00% VK

Pipelife Hellas S.A. Thiva 24,089,735 EUR 100.00% VK

Pipelife Hrvatska d.o.o. Sveta Nedelja 47,171,500 HRK 100.00% VK

Pipelife Hungaria Kft. Debrecen 3,123,520,000 HUF 100.00% VK

QUALITY PLASTICS HOLDINGS LTD Cork 635,000 EUR 100.00% VK

PIPELIFE IRELAND LTD Cork 254 EUR 100.00% VK

Quality Plastics Sales Limited Cork 127 EUR 100.00% VK

Dromalour Plastics Limited Cork 3 EUR 100.00% VK

Kenfern Investments Ltd Cork 508 EUR 100.00% OK 1)

Pipelife UK Ltd Corby 244,001 GBP 100.00% VK

UAB Pipelife Lietuva Vilnius 1,600,000 LTL 100.00% VK

Pipelife Latvia SIA Riga 300,000 LVL 100.00% VK

Pipelife Nederland B.V. Enkhuizen 11,344,505 EUR 100.00% VK

Pipelife Finance B.V. Enkhuizen 18,000 EUR 100.00% VK

Pipelife Norge AS Surnadal 50,000,000 NOK 100.00% VK

Pipelife Polska S.A. Krokowa 112,243,963 PLN 100.00% VK

Pipelife Romania S.R.L. Bucuresti 7,323,115 RON 100.00% VK

Pipelife Serbia d.o.o. Beograd 97,355,375 RSD 100.00% VK

Pipelife RUS LLC Zhukov 359,458,072 RUB 100.00% VK

Pipelife Hafab AB Haparanda 3,000,000 SEK 100.00% VK

Pipelife Nordic AB Ölsremma 167,000,000 SEK 100.00% VK

Pipelife Sverige AB Ljung 3,600,000 SEK 100.00% VK

Pipelife Slovenija d.o.o. Trzin 843,258 EUR 100.00% VK

Pipelife Slovakia s r.o. Piestany 6,700 EUR 100.00% VK

Arili Plastik Sanayii A.S. Pendik/Istanbul 30,590,000 TRY 100.00% VK

Pipelife Jet Stream, Inc. Siloam Springs 0 USD 100.00% VK

PJSC Pipelife Ukraine Kyiv 30,000 USD 100.00% OK 1)


Wienerberger Ar Ar GAnnual Report 2013

Financial StatementsGroup Companies

176

Tondach Gleinstätten AG Gleinstätten 500,000 EUR 50.00% EQ 3)

Ziegelwerk Polsterer GmbH Leobersdorf 36,336 EUR 50.00% 4)

Tondach Slovensko spol. s.r.o. Nitrianske Pravno 14,937,263 EUR 100.00% 4)

Tondach Slovenija d.o.o. Krizevci pri Ljutomeru 5,195,293 EUR 100.00% 4)

Potisje Kanjiza d.d. Kanjiza 605,394,000 RSD 100.00% 4)

Tondach Makedonija d.d. Vinica 349,460,010 MKD 100.00% 4)

Tondach Bulgaria EOOD Sofia 298,400 BGN 100.00% 4)

Tondach Ceska republika s.r.o. Hranice 250,100,000 CZK 100.00% 4)

Tondach Magyarorszag Rt. Csorna 11,683,550,000 HUF 100.00% 4)

Tondach Romania GmbH Sibiu 58,320,655 RON 100.00% 4)

Tondach Hrvatska d.d. Bedekovcina 116,715,500 HRK 100.00% 4)

Tondach Bosna i Hercegovina d.o.o. Sarajevo 200,000 KM 80.00% 4)

Wienerberger Dach Beteiligungs GmbH Wien 500,000 ATS 100.00% VK

WIBRA Tondachziegel Beteiligungs-GmbH Wien 500,000 ATS 100.00% VK

Wienerberger Beteiligungs GmbH Wien 1,000,000 ATS 100.00% VK

Wienerberger Anteilsverwaltung GmbH Wien 35,000 EUR 100.00% VK

Tondach Holding GmbH Wien 35,000 EUR 100.00% VK

Wienerberger Industriebeteiligungsverwaltung GmbH Wien 35,000 EUR 100.00% VK

Wienerberger Finance Service B.V. Zaltbommel 18,000 EUR 100.00% VK

Wienerberger Finanz Service GmbH Wien 25,435,492 EUR 100.00% VK

Wienerberger West European Holding GmbH Wien 35,000 EUR 100.00% VK

Wienerberger ZZ Holding GmbH Wien 35,000 EUR 100.00% VK

WK Services NV Kortrijk 32,226,158 EUR 100.00% VK

Wienerberger Beteiligungs GmbH Hannover 26,000 EUR 100.00% OK 1)

Dryfix GmbH Hennersdorf 35,000 EUR 100.00% VK

Wienerberger Gamma Asset Management GmbH Wien 35,000 EUR 100.00% VK

Steinzeug-Keramo GmbH Frechen 18,408,000 EUR 100.00% VK

Steinzeug - Keramo NV Hasselt 9,400,000 EUR 100.00% VK

Keramo-Wienerberger Immo NV Hasselt 14,068,558 EUR 100.00% VK

SOCIETA DEL GRES S.p.A. Sorisole 2,000,000 EUR 100.00% VK

Keramo Steinzeug s.r.o. Ceske Budejovice 40,000,000 CZK 100.00% OK 1)

Steinzeug - Keramo B.V. Belfeld 2,722,680 EUR 100.00% VK

Steinzeug - Keramo SARL Pontoise 38,125 EUR 100.00% VK

Steinzeug-Keramo Sp. z.o.o. Piekary Slaskie 2,000,000 PLN 100.00% VKE

VK ......Full consolidationVKE ....First time full consolidationEQ ......At Equity consolidationEQE ....First time at equity consolidationOK ......No consolidationOKE ...No consolidation (first time)

1) Immaterial2) Holding company of the Pipelife Group3) Holding company of the Tondach Group4) Subsidiary of the Tondach Gleinstätten AG


177

Auditor’s Report

Wienerberger Ar Ar GAnnual Report 2013

Financial StatementsGroup CompaniesAuditor’s Report

Report on the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of Wienerberger AG, Vienna, for the year from 1 January 2013 to

31 December 2013. These consolidated financial statements comprise the consolidated balance sheet as of 31 December 2013, the consoli-dated income statement, the consolidated statement of comprehensive income, the consolidated statement of cash flows and the consolidated statement of changes in equity for the fiscal year 2013 and a summary of significant accounting policies and other explanatory notes.

Management‘s Responsibility for the Consolidated Financial Statements and for the Accounting SystemThe Company’s management is responsible for the group accounting system and for the preparation and fair presentation of these

consolidated financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU, and the additional requirements pursuant to § 245a UGB (Austrian Commercial Code). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor‘s Responsibility and Description of Type and Scope of the Statutory AuditOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in

accordance with laws and regulations applicable in Austria as well as in accordance with International Standards on Auditing, issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC). Those standards require that we comply with professional guidelines and that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor‘s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionOur audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the consolidated financial state-

ments comply with legal requirements and give a true and fair view of the financial position of the Group as of 31 December 2013 and of its financial performance and its cash flows for the year from 1 January to 31 December 2013 in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU.

Report on the Management Report for the GroupPursuant to statutory provisions, the management report for the Group is to be audited as to whether it is consistent with the consolidated

financial statements and as to whether the other disclosures are not misleading with respect to the Company’s position. The auditor’s report also has to contain a statement as to whether the management report for the Group is consistent with the consolidated financial statements and whether the disclosures pursuant to Section 243a UGB (Austrian Commercial Code) are appropriate.

In our opinion, the management report for the Group is consistent with the consolidated financial statements. The disclosures pursuant to Section 243a UGB (Austrian Commercial Code) are appropriate.


KPMG Wirtschaftsprüfungs- und Steuerberatungs AG

signed by

Mag. Helmut Kerschbaumer Mag. Yann-Georg Hansa Wirtschaftsprüfer Wirtschaftsprüfer (Austrian Chartered Accountants)

178

Acquisition Expenditure for the purchase

of a company or share in a company

(vs. investment – see below)

ADR American Depository Receipt: deposit

certificates that confirm ownership of a

foreign stock and are traded on US stock

exchanges or over-the-counter as shares;

US banks buy stock and issue ADR’s in order

to give foreign companies access to the

US capital market

Asset coverage Equity divided by non-

current assets; indicates to what percent land,

buildings, machinery etc. are covered by

equity

ATX Abbreviation for the “Austrian Traded

Price Index” of the Vienna Stock Exchange

Bearer shares Shares that are not issued

to a specific person; the rights to these

securities accrue to the person who holds

them

Bolt-on projects Construction of new plants,

capacity upgrades or smaller acquisitions that

carry synergy potential through integration in

existing operations

CAGR Compound Annual Growth Rate

Capital Employed (CE) Equity plus interest-

bearing debt (incl. net inter-company balance)

less liquid funds and financial assets; the sum

of capital engaged in a company

Capital Employed, historical Capital

employed at historical purchase prices; capital

employed plus accumulated depreciation

CFROI Cash Flow Return on Investment;

ratio of operating EBITDA to average

historical capital employed

Clay blocks Bricks made of burned clay,

which are normally used as perforated bricks

under plaster

Clay roof tiles Roof tiles made of burned

clay in various shapes and colors

Common shares Shares that carry full

rights in a stock corporation (including

participation in the Annual General Meetings,

voting rights and dividend rights)

Corporate governance Rules for the

responsible management and control of

companies that are set forth in the Austrian

Corporate Governance Code

Covenant (financial) A clause in a credit

agreement that obliges the borrower not to

exceed or fall below a specific indicator

Cross currency swap Agreement between

contract partners to exchange cash flows in

two different curren cies over a certain period

of time; a hedge against foreign currency

fluctuations

CVA Cash Value Added; operating EBITDA -

(average historical capital employed x hurdle

rate)

Deferred taxes The result of timing differ-

ences in the valuation of individual company

financial statements prepared according to

IFRS and tax law

Depreciation, economic The value that

must be earned each year in order to cover

expenses for replacement investments at the

end of an asset’s useful life

Depreciation ratio Depreciation (excluding

impairment charges to goodwill and assets) as

a percentage of revenues

Glossary

SeRviCe

179

EBIT Earnings before interest and taxes,

or operating profit

EBITDA Earnings before interest, taxes,

depreciation and amortization, or operating

profit before depreciation and amortization =

gross cash flow

EBITDA margin EBITDA divided by

revenues

Equity method Valuation method used for

the consolidation of investments between

20% and 50% in other companies

Equity ratio Equity divided by total assets

EVA Economic Value Added, or the difference

between the return on capital employed and

cost of capital; average capital employed x

(ROCE - WACC)

Facing brick External brick layer of two-

layer non-load bearing exterior walls for

buildings (face wall – air layer below/above

insulation – rear wall)

Forward exchange contract Foreign

exchange transaction that is not realized at

conclusion of the relevant contract, but at a

later point in time; a hedge against exchange

rate fluctuations

Free cash flow Cash flow from operating

activities less cash flow from investing

activities + growth capex; the amount of cash

earned in the current year that is available

for expansion projects, dividends and the

repayment of debt or share buy-backs

Free float company Publicly traded

corporation with a majority share of free float

GARP investor Growth at a reasonable price;

investor who aims to identify only those

growth stocks that meet his/her criteria for

buying at reasonable prices

Gearing Debt indicator; financial liabilities

less liquid funds (securities, cash on hand

and in banks, net intra-Group receivables/

lia bilities) divided by equity including

non-controlling interests; an indicator of

financial security

Goodwill Surplus of the price paid for a

company over the net assets acquired

Hedging Measures used in the management

of financial risk to limit or avoid negative

market changes in the areas of interest rates,

foreign currency, market values or raw

materials

Hurdle rate Return that must be earned

to cover the cost of capital and economic

depreciation; WACC before tax + economic

depreciation (see above)

Hybrid capital Subordinated perpetual

corporate bond, which is ranked between

equity and debt as mezzanine capital

IFRS International Financial Reporting

Standards

Interest cover operating EBIT divided by

interest result; indicates the number of times

operating income will cover interest result

Interest rate swap Agreement to exchange

cash flows with different terms over a specific

period of time; these cash flows are based on

fixed and variable interest rates; provides

security against interest rate fluctuations

Investments Additions to plant, property

and equipment and intangible assets

(vs. acquisitions – see above)

Joint venture Agreement by two or more

companies to jointly operate a business

enterprise

ServiceGlossary


180

Long-term incentive (LTI) program

A long-term variable remuneration program

for the Managing Board and key Group

managers to synchronize management goals

with shareholders’ interests

Net debt Net sum of financial liabilities less

cash and cash at bank and securities

NF Abbreviation for “Normalformat”,

the standard size for clay blocks

(250 x 120 x 65 mm)

NOPAT Net operating profit after tax,

or operating profit less taxes and adjusted

taxes (tax effects from financial results)

Operating EBIT EBIT adjusted for

non-recurring income and expenses

Operating EBITDA EBITDA adjusted

for non-recurring income and expenses

Paver Product made of clay or concrete,

which is used in the design of gardens

and public areas

PE Polyethylene, a synthetic material

PP Polypropylene, a synthetic material

Preferred shares Shares that are senior

to common shares based on special rights

conveyed by the articles of association

PVC Polyvinyl chloride, a synthetic material

P/E ratio Price/earnings ratio; an indicator

for the market valuation of a stock

Rating Standardized evaluation of the credit

standing of a company, which indicates the

probability of insolvency or delayed payments

Registered shares Shares issued in the name

of the shareholder; the owner is listed in the

company’s share register

Return on equity Net profit divided by

equity, or the rate of return on shareholders’

investments

ROCE Return on capital employed, or

NOPAT divided by average capital employed

= net yield on capital employed

Stock option Form of compensation that

gives management and employees the right

to purchase stock in their company at certain

conditions if specific goals are reached

Strategic projects Acquisitions of larger

competitors or companies with leading

market positions or the construction of plants

in new markets; these measures form the basis

for future bolt-on projects (see above)

Translation risk Arises from the conversion

of foreign currency items on the balance

sheet; these foreign exchange fluctuations are

not offset by balance sheet items in the same

currency

Treasury Staff function to safeguard the

financing, cash management and financial risk

management of a company

UGB “Unternehmensgesetzbuch”

(the Austrian Corporate Code)

WACC Weighted average cost of capital,

or the average price a company must pay

on financial markets for equity and debt

WF Abbreviation for “Waalformat”, the

standard size for a facing brick (210 x 100 x

50 mm)

181

Addresses of Major Companies

ServiceGlossaryAddresses of Major Companies


Headquarters: Wienerberger AG

A-1100 Vienna, Wienerberg City Wienerbergstrasse 11 T +43 1 60 192 0 [email protected] www.wienerberger.com

Operating companies:

Wienerberger Ziegelindustrie GmbH

A-2332 HennersdorfHauptstrasse 2T +43 1 605 03 [email protected]

Wienerberger Téglaipari zRt.

H-1119 BudapestBártfai u. 34T +36 1 464 70 [email protected]

Wienerberger cihlárský pumysl, a.s.

CZ-370 46 Ceské BudejovicePlachého 388/28T + 420 38 382 61 [email protected]

Wienerberger Ceramika

Budowlana Sp.zo.o.

PL-04-175 Warszawaul. Ostrobramska 79T +48 22 514 21 [email protected]

Wienerberger slovenské tehelne,

spol.sr.o.

SK-95301 Zlaté MoravceTehelnáT +421 37 640 90 [email protected]

Wienerberger Ilovac d.d.

HR-47000 KarlovacDonje Pokupje 2T +385 47 69 41 [email protected]

Wienerberger Oy Ab

FIN-00380 HelsinkiStrömberginkuja 2T +358 207 489 [email protected]

Wienerberger AS

EST-43401 AseriKordoni 1T +372 334 [email protected]

General Shale Brick, Inc.

USA-Johnson City TN 376013015 Bristol HighwayT +1 423 282 [email protected]

Semmelrock International GmbH

A-1100 ViennaWienerberg CityWienerbergstrasse 11T +43 1 601 92 [email protected]

Tondach Gleinstätten AG

A-8443 GleinstättenGraschach 38T +43 3457 2218 [email protected]

Pipelife International GmbH

A-2351 Wiener NeudorfTriester Strasse 14T +43 2236 439 39 [email protected]

Steinzeug-Keramo GmbH

D-50226 FrechenAlfred-Nobel-Strasse 17T +49 2234 [email protected]

Schlagmann Poroton GmbH

& Co. KG

D-84367 ZeilarnZiegeleistrasse 1T +49 8572 [email protected]

Wienerberger S.p.a. unipersonale

I-40027 Mordano (BO) fraz. BubanoVia Ringhiera 1 T +39 0542 568 [email protected]

Wienerberger NV/SA

B-8500 KortrijkKapel ter Bede 121T +32 56 24 96 [email protected]

Wienerberger B.V.

NL-5301 LK ZaltbommelHogeweg 95T +31 88 118 [email protected]

Wienerberger SAS

F-67204 Achenheim8, Rue du CanalT +33 3 90 64 64 [email protected]

Wienerberger Ltd

GB-SK8 3SA Cheadle, CheshireWienerberger House, Brooks Drive, Cheadle Royal Business ParkT +44 161 491 [email protected]

Wienerberger A/S

DK-3200 HelsingeRørmosevej 85T +45 70 13 13 [email protected]

Wienerberger AB

S-237 91 BjärredFlädieT +46 771 42 43 [email protected]

Wienerberger AS

N-3825 LundeStrengenveien 31T +47 35 94 67 [email protected]

Wienerberger Opekarna Ormož d.o.o.

SLO-2270 OrmožOpekarniška cesta 5T +386 2 7410 [email protected]

Wienerberger Sisteme de

Cărămizi SRL

RO-013696 BucurestiSos. Bucuresti-Ploiesti nr 42-44Baneasa Business&Technology Park, Corp A1, et. 1T +40 21 361 04 [email protected]

Wienerberger EOOD

BG-1172 Sofia4 St. Pimen Zografski Str.Business Building 2. Fl. 1, Office 1T +359 2 806 67 [email protected]

OOO Wienerberger Kirpich

RUS-107140 MoskvaRusakowskaya Str. 13T +7 495 280 33 [email protected]

Wienerberger TOV

UA-02660 KyivStr. Kraynya 1-BT +380 44 594 50 [email protected]

Wienerberger India Private Limited

IND-560 025 Bangalore88/4, Richmond RoadT +91 80 41 491 [email protected]

Wienerberger GmbH

D-30659 HannoverOldenburger Allee 26T +49 511 610 70 [email protected]

ZZ Wancor AG

CH-8105 RegensdorfEichwatt 1T +41 44 871 32 [email protected]

182

1) The data were adjusted to reflect a change in accounting policy2) Operating EBIT / Interest result3) Profit after tax / Equity4) Since 2005 financial year, calculation based on average capital employed

(2012 calculated on pro-forma 12-month basis)

Corporate Data 2004 2005 2006 2007

Revenues in € mill. 1,758.8 1,954.6 2,225.0 2,477.3

EBITDA in € mill. 405.4 429.3 476.6 551.2

Operating EBITDA in € mill. 405.4 428.4 471.9 551.2

Operating EBITDA margin in% 23.1 21.9 21.2 22.3

EBIT in € mill. 257.5 269.6 297.5 353.1

Operating EBIT in € mill. 257.5 270.3 303.1 353.1

Profit before tax in € mill. 231.4 251.3 277.3 358.4

Profit after tax in € mill. 181.8 196.4 218.3 295.8

Free cash flow in € mill. 300.7 212.5 272.1 293.8

Total investments in € mill. 632.6 338.7 530.4 645.6

Net debt in € mill. 762.4 934.4 1,159.8 566.8

Capital employed in € mill. 2,031.5 2,289.4 2,598.2 3,060.2

Gearing in% 55.8 63.0 72.9 21.2

Interest cover 2) 7.7 6.2 6.2 8.2

Return on equity 3) in% 13.3 13.2 13.7 11.1

ROCE 4) in% 9.7 9.4 9.4 10.1

EVA® 4) in € mill. 43.8 41.5 45.7 72.8

CFROI 5) in% 12.9 12.9 12.6 13.0

CVA 5) in € mill. 28.6 28.7 23.8 42.8

Ø Employees 12,154 13,327 13,639 14,785

Stock Exchange Data 2004 2005 2006 2007

Earnings per share in € 2.54 2.66 2.95 3.46

Adjusted earnings per share in € 2.54 2.67 3.02 3.46

Dividend per share in € 1.07 1.18 1.30 1.45

Dividend in € mill. 78.7 86.4 95.3 120.5

Equity per share 6) in € 19.6 20.3 21.7 28.9

Share price at year-end in € 35.15 33.80 45.00 37.93

Shares outstanding (weighted) 7) in 1,000 69,598 73,196 73,309 75,491

Market capitalization at year-end in € mill. 2,607.0 2,506.9 3,337.6 3,184.1

Condensed Balance Sheet 2004 2005 2006 2007

Non-current assets in € mill. 2,012.7 2,232.1 2,531.6 2,915.8

Inventories in € mill. 391.4 445.9 509.8 669.8

Other assets in € mill. 461.8 591.6 632.9 744.3

Balance sheet total in € mill. 2,865.9 3,269.6 3,674.3 4,329.9

Equity 8) in € mill. 1,367.2 1,483.1 1,591.4 2,672.7

Provisions in € mill. 178.9 168.4 177.5 188.4

Liabilities in € mill. 1,319.8 1,618.1 1,905.4 1,468.8

Ten-Year Review

183

5) Since 2005 financial year, calculation based on average historical capital employed (2012 calculated on pro-forma 12-month basis)

6) Equity including non-controlling interests; excluding hybrid capital7) Adjusted for treasury stock8) Equity including non-controlling interest and hybrid capital

CAGR

2008 2009 2010 1) 2011 1) 2012 2013 2004 - 2013

2,431.4 1,816.9 1,663.6 1,915.4 2,355.5 2,662.9 5%

396.6 157.5 198.3 240.4 216.7 275.9 -4%

440.1 208.6 198.3 240.4 245.5 266.5 -5%

18.1 11.5 11.9 12.6 10.4 10.0

158.1 -258.1 4.6 37.5 -21.7 64.7 -14%

239.8 19.0 4.6 40.0 31.0 55.3 -16%

123.1 -295.6 -42.5 47.4 -36.2 -3.1 -162%

103.3 -258.7 -35.4 39.4 -40.5 -7.8 -171%

195.4 250.8 170.5 135.0 163.6 92.9 -12%

505.6 134.2 143.5 151.7 268.7 106.7 -18%

890.2 408.0 362.3 358.8 602.0 538.9 -4%

3,252.2 2,816.8 2,718.4 2,652.1 2,931.3 2,767.6 3%

35.6 16.0 14.5 14.8 25.5 23.9

5.7 0.5 0.1 1.1 0.6 1.0

4.1 -10.2 -1.4 1.6 -1.7 -0.3

6.2 0.2 0.0 0.9 0.4 1.3

-27.8 -207.3 -183.8 -163.3 -192.2 -161.4

9.3 4.3 4.2 5.0 5.2 5.1

-103.0 -353.8 -348.6 -313.7 -331.8 -335.8

15,162 12,676 11,296 11,893 13,060 13,787 1%

CAGR

2008 2009 2010 1) 2011 1) 2012 2013 2004 - 2013

0.81 -3.17 -0.58 0.07 -0.61 -0.34 -180%

1.69 -0.34 -0.58 0.09 -0.25 -0.40 -181%

0.00 0.00 0.10 0.12 0.12 0.12 -22%

0.0 0.0 11.7 14.1 14.1 14.1 -17%

24.2 22.5 17.3 16.6 16.3 15.3 -3%

11.90 12.78 14.29 6.97 6.93 11.53 -12%

82,895 91,297 116,528 116,762 115,063 115,063 6%

999.0 1,502.0 1,679.5 819.2 814.3 1,354.5 -7%

CAGR

2008 2009 2010 1) 2011 1) 2012 2013 2004 - 2013

3,011.0 2,726.0 2,708.1 2,611.4 2,800.8 2,610.0 3%

720.0 552.4 555.9 576.6 700.9 666.0 6%

652.9 809.0 737.3 803.4 638.0 935.4 8%

4,383.9 4,087.4 4,001.3 3,991.4 4,139.7 4,211.4 4%

2,497.2 2,547.0 2,503.3 2,430.8 2,363.7 2,254.2 6%

190.0 187.9 205.3 197.2 265.9 224.5 3%

1,696.7 1,352.5 1,292.7 1,363.4 1,510.1 1,732.7 3%

ServiceTen-Year Review


184

January 28, 2014 Start of the quiet period

February 27, 2014 Results of 2013: Press and Analysts Conference in Vienna

February 28, 2014 Analysts Conference in London

March 28, 2014 Publication of the 2013 Annual Report on the Wienerberger website

April 17, 2014 Start of the quiet period

May 9, 2014 First Quarter Results for 2014

May 16, 2014 145th Annual General Meeting in the Austria Center Vienna

May 20, 2014 Deduction of dividends for 2013 (ex-day)

May 22, 2014 Payment Day for 2013 dividends

June 24, 2014 Sustainability Update 2013

July 22, 2014 Start of the quiet period

August 19, 2014 Results for the First Six Months of 2014: Press and Analysts Conference in Vienna

August 20, 2014 Analysts Conference in London

September 2014 Capital Markets Day 2014

October 21, 2014 Start of the quiet period

November 12, 2014 Third Quarter Results for 2014

Financial Calendar

Information on the Company and the Wienerberger Share

Head of Investor Relations Klaus Ofner

Shareholders’ Telephone +43 1 601 92 10221

E-Mail [email protected]

Internet www.wienerberger.com

Vienna Stock Exchange WIE

Thomson Reuters WBSV.VI; WIE-VI

Bloomberg WIE AV

Datastream O: WNBA

ADR Level 1 WBRBY

ISIN AT0000831706

Wienerberger Online Annual Report 2013:http://annualreport.wienerberger.com



Revenues in € mill. 1,915.4 2,355.5 2,662.9 +13






EBIT in € mill. 37.5 -21.7 64.7 >100






ROCE 3) in % 0.9 0.4 1.3 -

CFROI 3) in % 5.0 5.2 5.1 -

Ø Employees 11,893 13,060 13,787 +6


Equity 4) in € mill. 2,430.8 2,363.7 2,254.2 -5

Net debt in € mill. 358.8 602.0 538.9 -10



Gearing in % 14.8 25.5 23.9 -












Revenues 1,404.3 (-3%) 1,030.4 (+45%) 225.9 (+17%) 14.7 (+4%) -12.4 (-21%)


Operating EBIT 35.0 (-4%) 52.1 (+65%) -9.3 (+37%) -22.6 (-2%)

CFROI in % 4.5 - 14.2 - 1.9 - -30.4 -



Ø Employees 8,323 (-5%) 4,047 (+33%) 1,213 (+14%) 204 (-2%)



2011 2012 2013

Revenues


0%

10%

20%

30%

40%

1,91

5.4 2,35

5.5

2,66

2.9

10.4 10.012.6


2011 2012 2013

Operating EBITDA

EBIT

0

100

-100

200

300

240.

4

245.

5

266.

5

37.5

-21.

7

64.7


IFRS

Adjusted

-1.0

0.0

0.5

-0.5

1.0

2011 2012 2013

0.07

0.09

-0.6

1

-0.3

4

-0.2

5

-0.4

0

Equity and Net Debtin € mill.

2011 2012 2013

Equity

Net debt

0

500

1,000

1,500

2,000

2,500

3,000

2,43

0.8

2,36

3.7

2,25

4.2

358.

8

602.

0

538.

9


2011 2012 2013

Free cash flow

Growth capex

0

100

50

200

150

250

135.

0 163.

6

92.9

55.9

163.

4

0.7

ROCE and CFROIin %

2011 2012 2013

ROCE

CFROI

WACC

Hurdle rate

0.0

3.0

6.0

9.0

12.0

5.0

5.2

5.1

0.9

0.4 1.

3


1

2

5

4

3

6

1

2

3

6

5

4

1

2

6

5

4

3



Revenues by Product







T +43 1 601 92 10221 or

[email protected]








T +43 1 601 92 0, F +43 1 601 92 10425



Wie

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20

13

The Year 2013 in ReviewWienerberger increased revenues by 13% to € 2,662.9 million and operating EBITDA by 9% to

€ 266.5 million in 2013. This sound development was recorded in spite of an ongoing difficult market

environment during the past year. In particular, business in Europe was negatively affected by unusually

severe weather during the first six months and by general weakness in the construction industry throughout

the entire year. Although this region is responsible for roughly 90% of revenues, Wienerberger generated

a solid increase in revenues and earnings. This growth was driven, above all, by a positive contribution

from the pipe business, which benefited from international project orders for plastic pipes, and by good

development in North America.

In spite of the difficult environment, Wienerberger successfully expanded its market positions in a

number of countries during 2013. The restructuring measures launched in 2012 were implemented as

planned, and net debt was substantially reduced through financial discipline and strict working capital

management. The ratio of net debt to operating EBITDA equaled two years at year-end, which is clearly

lower than the internal goal of two and one-half years. Even if the bottom line shows a small loss

of € 7.8 million for 2013, free cash flow of € 92.9 million underscores the strength of Wienerberger’s

business model.

Market positionsWienerberger is the world’s largest producer of clay blocks and number one in facing bricks in Europe

and the USA as well as the market leader for clay roof tiles in Europe. The Group is also one of the leading

suppliers of plastic pipes and ceramic pipes in Europe and concrete pavers in Central-East Europe.

Clay blocks: Nr. 1 worldwideFacing bricks: Nr. 1 in Europe, co-leader in the USAClay roof tiles: Nr. 1 in EuropePlastic pipes: Leading position in EuropeCeramic pipes: Nr. 1 in EuropeConcrete pavers: Nr. 1 in Central-East Europe

Annual Report 2013

Our typical waiting position.